Correlation Between Danang Rubber and CEO Group

Can any of the company-specific risk be diversified away by investing in both Danang Rubber and CEO Group 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 Danang Rubber and CEO Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Danang Rubber JSC and CEO Group JSC, you can compare the effects of market volatilities on Danang Rubber and CEO Group 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 Danang Rubber with a short position of CEO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Rubber and CEO Group.

Diversification Opportunities for Danang Rubber and CEO Group

0.65

Correlation Coefficient

Danang Rubber  CEO Group

Poor diversification

The 3 months correlation between Danang and CEO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber JSC and CEO Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEO Group JSC and Danang Rubber 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 Danang Rubber JSC are associated (or correlated) with CEO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEO Group JSC has no effect on the direction of Danang Rubber i.e., Danang Rubber and CEO Group go up and down completely randomly.

Pair Corralation between Danang Rubber and CEO Group

Assuming the 90 days trading horizon Danang Rubber JSC is expected to generate 0.63 times more return on investment than CEO Group. However, Danang Rubber JSC is 1.59 times less risky than CEO Group. It trades about -0.04 of its potential returns per unit of risk. CEO Group JSC is currently generating about -0.03 per unit of risk. If you would invest  2,965,000  in Danang Rubber JSC on September 16, 2024 and sell it today you would lose (65,000) from holding Danang Rubber JSC or give up 2.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.73%
Values	Daily Returns

Danang Rubber JSC  vs.  CEO Group JSC

Danang Rubber JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danang Rubber JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CEO Group JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Danang Rubber and CEO Group

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

The idea behind Danang Rubber JSC and CEO Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..