Correlation Between Danang Port and Transimex Transportation

Can any of the company-specific risk be diversified away by investing in both Danang Port and Transimex Transportation 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 Transimex Transportation 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 Transimex Transportation JSC, you can compare the effects of market volatilities on Danang Port and Transimex Transportation 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 Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Port and Transimex Transportation.

Diversification Opportunities for Danang Port and Transimex Transportation

-0.11

Correlation Coefficient

Danang Port  Transimex Transportation

Good diversification

The 3 months correlation between Danang and Transimex is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Danang Port JSC and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation 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 Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of Danang Port i.e., Danang Port and Transimex Transportation go up and down completely randomly.

Pair Corralation between Danang Port and Transimex Transportation

Assuming the 90 days trading horizon Danang Port is expected to generate 1.96 times less return on investment than Transimex Transportation. But when comparing it to its historical volatility, Danang Port JSC is 1.07 times less risky than Transimex Transportation. It trades about 0.05 of its potential returns per unit of risk. Transimex Transportation JSC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,750,000  in Transimex Transportation JSC on December 28, 2024 and sell it today you would earn a total of  180,000  from holding Transimex Transportation JSC or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.76%
Values	Daily Returns

Danang Port JSC  vs.  Transimex Transportation JSC

Danang Port JSC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Danang Port JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Danang Port may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Transimex Transportation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transimex Transportation JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Transimex Transportation displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danang Port and Transimex Transportation

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

The idea behind Danang Port JSC and Transimex Transportation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.