Correlation Between FPT Digital and Duc Thanh

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

By analyzing existing cross correlation between FPT Digital Retail and Duc Thanh Wood, you can compare the effects of market volatilities on FPT Digital and Duc 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 FPT Digital with a short position of Duc Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Digital and Duc Thanh.

Diversification Opportunities for FPT Digital and Duc Thanh

0.13

Correlation Coefficient

FPT Digital  Duc Thanh

Average diversification

The 3 months correlation between FPT and Duc is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FPT Digital Retail and Duc Thanh Wood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duc Thanh Wood and FPT Digital 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 FPT Digital Retail are associated (or correlated) with Duc Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duc Thanh Wood has no effect on the direction of FPT Digital i.e., FPT Digital and Duc Thanh go up and down completely randomly.

Pair Corralation between FPT Digital and Duc Thanh

Assuming the 90 days trading horizon FPT Digital Retail is expected to generate 1.19 times more return on investment than Duc Thanh. However, FPT Digital is 1.19 times more volatile than Duc Thanh Wood. It trades about -0.02 of its potential returns per unit of risk. Duc Thanh Wood is currently generating about -0.14 per unit of risk. If you would invest  18,420,000  in FPT Digital Retail on December 19, 2024 and sell it today you would lose (420,000) from holding FPT Digital Retail or give up 2.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

FPT Digital Retail  vs.  Duc Thanh Wood

FPT Digital Retail

Risk-Adjusted Performance

Very Weak

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

Duc Thanh Wood

Risk-Adjusted Performance

Very Weak

Over the last 90 days Duc Thanh Wood has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic 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 FPT Digital and Duc Thanh

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

The idea behind FPT Digital Retail and Duc Thanh Wood 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.