Correlation Between Educational Book and Tien Phong

Can any of the company-specific risk be diversified away by investing in both Educational Book and Tien Phong 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 Educational Book and Tien Phong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Educational Book In and Tien Phong Plastic, you can compare the effects of market volatilities on Educational Book and Tien Phong 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 Educational Book with a short position of Tien Phong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Educational Book and Tien Phong.

Diversification Opportunities for Educational Book and Tien Phong

0.48

Correlation Coefficient

Educational Book  Tien Phong

Very weak diversification

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

Pair Corralation between Educational Book and Tien Phong

Assuming the 90 days trading horizon Educational Book In is expected to generate 1.71 times more return on investment than Tien Phong. However, Educational Book is 1.71 times more volatile than Tien Phong Plastic. It trades about 0.02 of its potential returns per unit of risk. Tien Phong Plastic is currently generating about -0.08 per unit of risk. If you would invest  1,550,000  in Educational Book In on October 16, 2024 and sell it today you would earn a total of  0.00  from holding Educational Book In or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.0%
Values	Daily Returns

Educational Book In  vs.  Tien Phong Plastic

Educational Book

Risk-Adjusted Performance

0 of 100

Weak

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

Tien Phong Plastic

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Educational Book and Tien Phong

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

The idea behind Educational Book In and Tien Phong Plastic 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.