Correlation Between Binh Thuan and Van Dien

Can any of the company-specific risk be diversified away by investing in both Binh Thuan and Van Dien 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 Van Dien 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 Van Dien Fused, you can compare the effects of market volatilities on Binh Thuan and Van Dien 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 Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Thuan and Van Dien.

Diversification Opportunities for Binh Thuan and Van Dien

-0.3

Correlation Coefficient

Binh Thuan  Van Dien

Very good diversification

The 3 months correlation between Binh and Van is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Binh Thuan Books and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused 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 Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Binh Thuan i.e., Binh Thuan and Van Dien go up and down completely randomly.

Pair Corralation between Binh Thuan and Van Dien

Assuming the 90 days trading horizon Binh Thuan Books is expected to under-perform the Van Dien. In addition to that, Binh Thuan is 1.14 times more volatile than Van Dien Fused. It trades about -0.01 of its total potential returns per unit of risk. Van Dien Fused is currently generating about 0.01 per unit of volatility. If you would invest  1,460,000  in Van Dien Fused on October 24, 2024 and sell it today you would lose (50,000) from holding Van Dien Fused or give up 3.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.31%
Values	Daily Returns

Binh Thuan Books  vs.  Van Dien Fused

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Van Dien Fused

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Binh Thuan and Van Dien

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

The idea behind Binh Thuan Books and Van Dien Fused 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.