Correlation Between Ben Thanh and Tien Giang

Can any of the company-specific risk be diversified away by investing in both Ben Thanh and Tien Giang at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ben Thanh and Tien Giang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ben Thanh Rubber and Tien Giang Investment, you can compare the effects of market volatilities on Ben Thanh and Tien Giang and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ben Thanh with a short position of Tien Giang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Tien Giang.

Diversification Opportunities for Ben Thanh and Tien Giang

0.77

Correlation Coefficient

Ben Thanh  Tien Giang

Poor diversification

The 3 months correlation between Ben and Tien is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Tien Giang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tien Giang Investment and Ben Thanh is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ben Thanh Rubber are associated (or correlated) with Tien Giang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tien Giang Investment has no effect on the direction of Ben Thanh i.e., Ben Thanh and Tien Giang go up and down completely randomly.

Pair Corralation between Ben Thanh and Tien Giang

Assuming the 90 days trading horizon Ben Thanh is expected to generate 4.25 times less return on investment than Tien Giang. But when comparing it to its historical volatility, Ben Thanh Rubber is 1.54 times less risky than Tien Giang. It trades about 0.1 of its potential returns per unit of risk. Tien Giang Investment is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  4,550,000  in Tien Giang Investment on October 23, 2024 and sell it today you would earn a total of  350,000  from holding Tien Giang Investment or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ben Thanh Rubber  vs.  Tien Giang Investment

Ben Thanh Rubber

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ben Thanh Rubber are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Ben Thanh may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tien Giang Investment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tien Giang Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Tien Giang displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ben Thanh and Tien Giang

The main advantage of trading using opposite Ben Thanh and Tien Giang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ben Thanh position performs unexpectedly, Tien Giang can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tien Giang will offset losses from the drop in Tien Giang's long position.

The idea behind Ben Thanh Rubber and Tien Giang Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.