Correlation Between Danang Port and Military Insurance

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

By analyzing existing cross correlation between Danang Port JSC and Military Insurance Corp, you can compare the effects of market volatilities on Danang Port and Military Insurance 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 Danang Port with a short position of Military Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Port and Military Insurance.

Diversification Opportunities for Danang Port and Military Insurance

0.48

Correlation Coefficient

Danang Port  Military Insurance

Very weak diversification

The 3 months correlation between Danang and Military is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Danang Port JSC and Military Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Military Insurance Corp and Danang Port 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 Danang Port JSC are associated (or correlated) with Military Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Military Insurance Corp has no effect on the direction of Danang Port i.e., Danang Port and Military Insurance go up and down completely randomly.

Pair Corralation between Danang Port and Military Insurance

Assuming the 90 days trading horizon Danang Port JSC is expected to generate 1.16 times more return on investment than Military Insurance. However, Danang Port is 1.16 times more volatile than Military Insurance Corp. It trades about 0.04 of its potential returns per unit of risk. Military Insurance Corp is currently generating about 0.02 per unit of risk. If you would invest  2,507,945  in Danang Port JSC on October 9, 2024 and sell it today you would earn a total of  892,055  from holding Danang Port JSC or generate 35.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.0%
Values	Daily Returns

Danang Port JSC  vs.  Military Insurance Corp

Danang Port JSC

Risk-Adjusted Performance

15 of 100

Good

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

Military Insurance Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Military Insurance Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Military Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Danang Port and Military Insurance

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

The idea behind Danang Port JSC and Military Insurance Corp 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.