Correlation Between Danang Rubber and Picomat Plastic

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

Diversification Opportunities for Danang Rubber and Picomat Plastic

-0.45

Correlation Coefficient

Danang Rubber  Picomat Plastic

Very good diversification

The 3 months correlation between Danang and Picomat is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber JSC and Picomat Plastic JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picomat Plastic 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 Picomat Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picomat Plastic JSC has no effect on the direction of Danang Rubber i.e., Danang Rubber and Picomat Plastic go up and down completely randomly.

Pair Corralation between Danang Rubber and Picomat Plastic

Assuming the 90 days trading horizon Danang Rubber JSC is expected to under-perform the Picomat Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Danang Rubber JSC is 1.8 times less risky than Picomat Plastic. The stock trades about -0.23 of its potential returns per unit of risk. The Picomat Plastic JSC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,270,000  in Picomat Plastic JSC on December 23, 2024 and sell it today you would earn a total of  120,000  from holding Picomat Plastic JSC or generate 9.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Danang Rubber JSC  vs.  Picomat Plastic JSC

Danang Rubber JSC

Risk-Adjusted Performance

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 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.

Picomat Plastic JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Picomat Plastic JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Picomat Plastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Danang Rubber and Picomat Plastic

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

The idea behind Danang Rubber JSC and Picomat Plastic 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.