Correlation Between Duong Hieu and Elcom Technology

Can any of the company-specific risk be diversified away by investing in both Duong Hieu and Elcom Technology 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 Duong Hieu and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Duong Hieu Trading and Elcom Technology Communications, you can compare the effects of market volatilities on Duong Hieu and Elcom Technology 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 Duong Hieu with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duong Hieu and Elcom Technology.

Diversification Opportunities for Duong Hieu and Elcom Technology

0.44

Correlation Coefficient

Duong Hieu  Elcom Technology

Very weak diversification

The 3 months correlation between Duong and Elcom is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Duong Hieu Trading and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and Duong Hieu 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 Duong Hieu Trading are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Duong Hieu i.e., Duong Hieu and Elcom Technology go up and down completely randomly.

Pair Corralation between Duong Hieu and Elcom Technology

Assuming the 90 days trading horizon Duong Hieu Trading is expected to generate 0.91 times more return on investment than Elcom Technology. However, Duong Hieu Trading is 1.1 times less risky than Elcom Technology. It trades about -0.04 of its potential returns per unit of risk. Elcom Technology Communications is currently generating about -0.09 per unit of risk. If you would invest  802,000  in Duong Hieu Trading on December 21, 2024 and sell it today you would lose (57,000) from holding Duong Hieu Trading or give up 7.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Duong Hieu Trading  vs.  Elcom Technology Communication

Duong Hieu Trading

Risk-Adjusted Performance

Very Weak

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

Elcom Technology Com

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elcom Technology Communications 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Duong Hieu and Elcom Technology

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

The idea behind Duong Hieu Trading and Elcom Technology Communications 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.