Correlation Between DIC Holdings and Dong Nai

Can any of the company-specific risk be diversified away by investing in both DIC Holdings and Dong Nai 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 DIC Holdings and Dong Nai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DIC Holdings Construction and Dong Nai Plastic, you can compare the effects of market volatilities on DIC Holdings and Dong Nai 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 DIC Holdings with a short position of Dong Nai. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIC Holdings and Dong Nai.

Diversification Opportunities for DIC Holdings and Dong Nai

-0.26

Correlation Coefficient

DIC Holdings  Dong Nai

Very good diversification

The 3 months correlation between DIC and Dong is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding DIC Holdings Construction and Dong Nai Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Nai Plastic and DIC Holdings 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 DIC Holdings Construction are associated (or correlated) with Dong Nai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Nai Plastic has no effect on the direction of DIC Holdings i.e., DIC Holdings and Dong Nai go up and down completely randomly.

Pair Corralation between DIC Holdings and Dong Nai

Assuming the 90 days trading horizon DIC Holdings Construction is expected to generate 0.98 times more return on investment than Dong Nai. However, DIC Holdings Construction is 1.03 times less risky than Dong Nai. It trades about 0.1 of its potential returns per unit of risk. Dong Nai Plastic is currently generating about -0.02 per unit of risk. If you would invest  1,233,930  in DIC Holdings Construction on December 28, 2024 and sell it today you would earn a total of  166,070  from holding DIC Holdings Construction or generate 13.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.59%
Values	Daily Returns

DIC Holdings Construction  vs.  Dong Nai Plastic

DIC Holdings Construction

Risk-Adjusted Performance

Modest

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

Dong Nai Plastic

Risk-Adjusted Performance

Very Weak

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

Pair Trading with DIC Holdings and Dong Nai

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

The idea behind DIC Holdings Construction and Dong Nai 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.

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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.