Correlation Between DIC Holdings and HNX

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

Diversification Opportunities for DIC Holdings and HNX

0.51

Correlation Coefficient

DIC Holdings  HNX

Very weak diversification

The 3 months correlation between DIC and HNX is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding DIC Holdings Construction and HNX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNX 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 HNX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNX has no effect on the direction of DIC Holdings i.e., DIC Holdings and HNX go up and down completely randomly.

Pair Corralation between DIC Holdings and HNX

Assuming the 90 days trading horizon DIC Holdings Construction is expected to under-perform the HNX. In addition to that, DIC Holdings is 4.33 times more volatile than HNX. It trades about -0.28 of its total potential returns per unit of risk. HNX is currently generating about -0.27 per unit of volatility. If you would invest  22,836  in HNX on October 25, 2024 and sell it today you would lose (769.00) from holding HNX or give up 3.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

DIC Holdings Construction  vs.  HNX

Pair Trading with DIC Holdings and HNX

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

The idea behind DIC Holdings Construction and HNX 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.