Correlation Between Ducgiang Chemicals and Ngan Son

Can any of the company-specific risk be diversified away by investing in both Ducgiang Chemicals and Ngan Son 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 Ducgiang Chemicals and Ngan Son into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ducgiang Chemicals Detergent and Ngan Son JSC, you can compare the effects of market volatilities on Ducgiang Chemicals and Ngan Son 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 Ducgiang Chemicals with a short position of Ngan Son. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ducgiang Chemicals and Ngan Son.

Diversification Opportunities for Ducgiang Chemicals and Ngan Son

-0.56

Correlation Coefficient

Ducgiang Chemicals  Ngan Son

Excellent diversification

The 3 months correlation between Ducgiang and Ngan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ducgiang Chemicals Detergent and Ngan Son JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngan Son JSC and Ducgiang Chemicals 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 Ducgiang Chemicals Detergent are associated (or correlated) with Ngan Son. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngan Son JSC has no effect on the direction of Ducgiang Chemicals i.e., Ducgiang Chemicals and Ngan Son go up and down completely randomly.

Pair Corralation between Ducgiang Chemicals and Ngan Son

Assuming the 90 days trading horizon Ducgiang Chemicals Detergent is expected to generate 0.43 times more return on investment than Ngan Son. However, Ducgiang Chemicals Detergent is 2.35 times less risky than Ngan Son. It trades about 0.05 of its potential returns per unit of risk. Ngan Son JSC is currently generating about -0.07 per unit of risk. If you would invest  11,097,300  in Ducgiang Chemicals Detergent on October 6, 2024 and sell it today you would earn a total of  452,700  from holding Ducgiang Chemicals Detergent or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Ducgiang Chemicals Detergent  vs.  Ngan Son JSC

Ducgiang Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ducgiang Chemicals Detergent are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Ducgiang Chemicals is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Ngan Son JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ngan Son JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ducgiang Chemicals and Ngan Son

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

The idea behind Ducgiang Chemicals Detergent and Ngan Son 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.