Correlation Between Everland Investment and Binhthuan Agriculture

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

By analyzing existing cross correlation between Everland Investment JSC and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Everland Investment and Binhthuan Agriculture 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 Everland Investment with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everland Investment and Binhthuan Agriculture.

Diversification Opportunities for Everland Investment and Binhthuan Agriculture

-0.08

Correlation Coefficient

Everland Investment  Binhthuan Agriculture

Good diversification

The 3 months correlation between Everland and Binhthuan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Everland Investment JSC and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Everland Investment 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 Everland Investment JSC are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Everland Investment i.e., Everland Investment and Binhthuan Agriculture go up and down completely randomly.

Pair Corralation between Everland Investment and Binhthuan Agriculture

Assuming the 90 days trading horizon Everland Investment JSC is expected to under-perform the Binhthuan Agriculture. But the stock apears to be less risky and, when comparing its historical volatility, Everland Investment JSC is 1.32 times less risky than Binhthuan Agriculture. The stock trades about -0.07 of its potential returns per unit of risk. The Binhthuan Agriculture Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  360,000  in Binhthuan Agriculture Services on October 25, 2024 and sell it today you would earn a total of  77,000  from holding Binhthuan Agriculture Services or generate 21.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Everland Investment JSC  vs.  Binhthuan Agriculture Services

Everland Investment JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Binhthuan Agriculture

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binhthuan Agriculture Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binhthuan Agriculture displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everland Investment and Binhthuan Agriculture

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

The idea behind Everland Investment JSC and Binhthuan Agriculture Services 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.