Correlation Between Ben Thanh and Picomat Plastic

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

By analyzing existing cross correlation between Ben Thanh Trading and Picomat Plastic JSC, you can compare the effects of market volatilities on Ben Thanh and Picomat Plastic 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 Picomat Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Picomat Plastic.

Diversification Opportunities for Ben Thanh and Picomat Plastic

0.1

Correlation Coefficient

Ben Thanh  Picomat Plastic

Average diversification

The 3 months correlation between Ben and Picomat is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Trading and Picomat Plastic JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picomat Plastic JSC 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 Trading are associated (or correlated) with Picomat Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picomat Plastic JSC has no effect on the direction of Ben Thanh i.e., Ben Thanh and Picomat Plastic go up and down completely randomly.

Pair Corralation between Ben Thanh and Picomat Plastic

Assuming the 90 days trading horizon Ben Thanh is expected to generate 1.11 times less return on investment than Picomat Plastic. In addition to that, Ben Thanh is 1.5 times more volatile than Picomat Plastic JSC. It trades about 0.05 of its total potential returns per unit of risk. Picomat Plastic JSC is currently generating about 0.09 per unit of volatility. If you would invest  500,000  in Picomat Plastic JSC on October 26, 2024 and sell it today you would earn a total of  830,000  from holding Picomat Plastic JSC or generate 166.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	36.84%
Values	Daily Returns

Ben Thanh Trading  vs.  Picomat Plastic JSC

Ben Thanh Trading

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ben Thanh Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Ben Thanh displayed solid returns over the last few months and may actually be approaching a breakup point.

Picomat Plastic JSC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Picomat Plastic JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Picomat Plastic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ben Thanh and Picomat Plastic

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

The idea behind Ben Thanh Trading and Picomat Plastic JSC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.