Correlation Between Binh Thuan and Binh Minh

Can any of the company-specific risk be diversified away by investing in both Binh Thuan and Binh Minh 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 Binh Thuan and Binh Minh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Binh Thuan Books and Binh Minh Plastics, you can compare the effects of market volatilities on Binh Thuan and Binh Minh 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 Binh Thuan with a short position of Binh Minh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Thuan and Binh Minh.

Diversification Opportunities for Binh Thuan and Binh Minh

0.43

Correlation Coefficient

Binh Thuan  Binh Minh

Very weak diversification

The 3 months correlation between Binh and Binh is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Binh Thuan Books and Binh Minh Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Minh Plastics and Binh Thuan 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 Binh Thuan Books are associated (or correlated) with Binh Minh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Minh Plastics has no effect on the direction of Binh Thuan i.e., Binh Thuan and Binh Minh go up and down completely randomly.

Pair Corralation between Binh Thuan and Binh Minh

Assuming the 90 days trading horizon Binh Thuan is expected to generate 1.23 times less return on investment than Binh Minh. In addition to that, Binh Thuan is 2.54 times more volatile than Binh Minh Plastics. It trades about 0.04 of its total potential returns per unit of risk. Binh Minh Plastics is currently generating about 0.12 per unit of volatility. If you would invest  4,064,280  in Binh Minh Plastics on October 10, 2024 and sell it today you would earn a total of  9,425,720  from holding Binh Minh Plastics or generate 231.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	58.45%
Values	Daily Returns

Binh Thuan Books  vs.  Binh Minh Plastics

Binh Thuan Books

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Binh Thuan Books has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Binh Thuan is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Binh Minh Plastics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binh Minh Plastics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binh Minh displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binh Thuan and Binh Minh

The main advantage of trading using opposite Binh Thuan and Binh Minh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binh Thuan position performs unexpectedly, Binh Minh 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 Binh Minh will offset losses from the drop in Binh Minh's long position.

The idea behind Binh Thuan Books and Binh Minh Plastics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.