Correlation Between Thanh Dat and Binh Thanh

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

By analyzing existing cross correlation between Thanh Dat Investment and Binh Thanh Import, you can compare the effects of market volatilities on Thanh Dat and Binh Thanh 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 Thanh Dat with a short position of Binh Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thanh Dat and Binh Thanh.

Diversification Opportunities for Thanh Dat and Binh Thanh

0.12

Correlation Coefficient

Thanh Dat  Binh Thanh

Average diversification

The 3 months correlation between Thanh and Binh is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Thanh Dat Investment and Binh Thanh Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Thanh Import and Thanh Dat 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 Thanh Dat Investment are associated (or correlated) with Binh Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Thanh Import has no effect on the direction of Thanh Dat i.e., Thanh Dat and Binh Thanh go up and down completely randomly.

Pair Corralation between Thanh Dat and Binh Thanh

Assuming the 90 days trading horizon Thanh Dat Investment is expected to generate 1.1 times more return on investment than Binh Thanh. However, Thanh Dat is 1.1 times more volatile than Binh Thanh Import. It trades about 0.07 of its potential returns per unit of risk. Binh Thanh Import is currently generating about 0.01 per unit of risk. If you would invest  1,035,917  in Thanh Dat Investment on October 27, 2024 and sell it today you would earn a total of  1,404,083  from holding Thanh Dat Investment or generate 135.54% return on investment over 90 days.

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

Thanh Dat Investment  vs.  Binh Thanh Import

Thanh Dat Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Binh Thanh Import

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Binh Thanh Import 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 essential 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 Thanh Dat and Binh Thanh

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

The idea behind Thanh Dat Investment and Binh Thanh Import 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.