Correlation Between Ba Ria and Hochiminh City

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

By analyzing existing cross correlation between Ba Ria Thermal and Hochiminh City Metal, you can compare the effects of market volatilities on Ba Ria and Hochiminh City 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 Ba Ria with a short position of Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ba Ria and Hochiminh City.

Diversification Opportunities for Ba Ria and Hochiminh City

-0.09

Correlation Coefficient

Ba Ria  Hochiminh City

Good diversification

The 3 months correlation between BTP and Hochiminh is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ba Ria Thermal and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal and Ba Ria 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 Ba Ria Thermal are associated (or correlated) with Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of Ba Ria i.e., Ba Ria and Hochiminh City go up and down completely randomly.

Pair Corralation between Ba Ria and Hochiminh City

Assuming the 90 days trading horizon Ba Ria Thermal is expected to under-perform the Hochiminh City. But the stock apears to be less risky and, when comparing its historical volatility, Ba Ria Thermal is 2.15 times less risky than Hochiminh City. The stock trades about -0.12 of its potential returns per unit of risk. The Hochiminh City Metal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,182,035  in Hochiminh City Metal on October 4, 2024 and sell it today you would earn a total of  92,965  from holding Hochiminh City Metal or generate 7.86% return on investment over 90 days.

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

Ba Ria Thermal  vs.  Hochiminh City Metal

Ba Ria Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ba Ria Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Hochiminh City Metal

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Ba Ria and Hochiminh City

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

The idea behind Ba Ria Thermal and Hochiminh City Metal 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 Stocks Directory module to find actively traded stocks across global markets.