Correlation Between Fecon Mining and Hanoi Beer

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

By analyzing existing cross correlation between Fecon Mining JSC and Hanoi Beer Alcohol, you can compare the effects of market volatilities on Fecon Mining and Hanoi Beer 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 Fecon Mining with a short position of Hanoi Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and Hanoi Beer.

Diversification Opportunities for Fecon Mining and Hanoi Beer

0.1

Correlation Coefficient

Fecon Mining  Hanoi Beer

Average diversification

The 3 months correlation between Fecon and Hanoi is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fecon Mining JSC and Hanoi Beer Alcohol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Beer Alcohol and Fecon Mining 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 Fecon Mining JSC are associated (or correlated) with Hanoi Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Beer Alcohol has no effect on the direction of Fecon Mining i.e., Fecon Mining and Hanoi Beer go up and down completely randomly.

Pair Corralation between Fecon Mining and Hanoi Beer

Assuming the 90 days trading horizon Fecon Mining JSC is expected to generate 1.21 times more return on investment than Hanoi Beer. However, Fecon Mining is 1.21 times more volatile than Hanoi Beer Alcohol. It trades about 0.12 of its potential returns per unit of risk. Hanoi Beer Alcohol is currently generating about 0.06 per unit of risk. If you would invest  320,976  in Fecon Mining JSC on September 30, 2024 and sell it today you would earn a total of  44,024  from holding Fecon Mining JSC or generate 13.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.3%
Values	Daily Returns

Fecon Mining JSC  vs.  Hanoi Beer Alcohol

Fecon Mining JSC

Risk-Adjusted Performance

9 of 100

OK

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

Hanoi Beer Alcohol

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hanoi Beer Alcohol are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hanoi Beer is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fecon Mining and Hanoi Beer

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

The idea behind Fecon Mining JSC and Hanoi Beer Alcohol 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.