Correlation Between Da Nang and POT
Can any of the company-specific risk be diversified away by investing in both Da Nang and POT 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 Da Nang and POT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Da Nang Construction and PostTelecommunication Equipment, you can compare the effects of market volatilities on Da Nang and POT 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 Da Nang with a short position of POT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Nang and POT.
Diversification Opportunities for Da Nang and POT
Good diversification
The 3 months correlation between DXV and POT is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Da Nang Construction and PostTelecommunication Equipmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostTelecommunication and Da Nang 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 Da Nang Construction are associated (or correlated) with POT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostTelecommunication has no effect on the direction of Da Nang i.e., Da Nang and POT go up and down completely randomly.
Pair Corralation between Da Nang and POT
Assuming the 90 days trading horizon Da Nang is expected to generate 4.23 times less return on investment than POT. But when comparing it to its historical volatility, Da Nang Construction is 1.47 times less risky than POT. It trades about 0.06 of its potential returns per unit of risk. PostTelecommunication Equipment is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,470,000 in PostTelecommunication Equipment on December 5, 2024 and sell it today you would earn a total of 260,000 from holding PostTelecommunication Equipment or generate 17.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 69.44% |
Values | Daily Returns |
Da Nang Construction vs. PostTelecommunication Equipmen
Performance |
Timeline |
Da Nang Construction |
PostTelecommunication |
Da Nang and POT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Da Nang and POT
The main advantage of trading using opposite Da Nang and POT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da Nang position performs unexpectedly, POT 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 POT will offset losses from the drop in POT's long position.Da Nang vs. Vietnam Petroleum Transport | Da Nang vs. Saigon Beer Alcohol | Da Nang vs. Nafoods Group JSC | Da Nang vs. PostTelecommunication Equipment |
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Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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