Correlation Between FIT INVEST and Danang Rubber

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

By analyzing existing cross correlation between FIT INVEST JSC and Danang Rubber JSC, you can compare the effects of market volatilities on FIT INVEST and Danang Rubber 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 FIT INVEST with a short position of Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT INVEST and Danang Rubber.

Diversification Opportunities for FIT INVEST and Danang Rubber

0.5

Correlation Coefficient

FIT INVEST  Danang Rubber

Very weak diversification

The 3 months correlation between FIT and Danang is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber JSC and FIT INVEST 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 FIT INVEST JSC are associated (or correlated) with Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of FIT INVEST i.e., FIT INVEST and Danang Rubber go up and down completely randomly.

Pair Corralation between FIT INVEST and Danang Rubber

Assuming the 90 days trading horizon FIT INVEST is expected to generate 4.7 times less return on investment than Danang Rubber. But when comparing it to its historical volatility, FIT INVEST JSC is 1.73 times less risky than Danang Rubber. It trades about 0.14 of its potential returns per unit of risk. Danang Rubber JSC is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  2,690,000  in Danang Rubber JSC on September 18, 2024 and sell it today you would earn a total of  220,000  from holding Danang Rubber JSC or generate 8.18% return on investment over 90 days.

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

FIT INVEST JSC  vs.  Danang Rubber JSC

FIT INVEST JSC

Risk-Adjusted Performance

0 of 100

Weak

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

Danang Rubber JSC

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with FIT INVEST and Danang Rubber

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

The idea behind FIT INVEST JSC and Danang Rubber 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.