Correlation Between Duc Thanh and Danang Port

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

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

Diversification Opportunities for Duc Thanh and Danang Port

0.1

Correlation Coefficient

Duc Thanh  Danang Port

Average diversification

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

Pair Corralation between Duc Thanh and Danang Port

Assuming the 90 days trading horizon Duc Thanh Wood is expected to generate 1.38 times more return on investment than Danang Port. However, Duc Thanh is 1.38 times more volatile than Danang Port JSC. It trades about 0.04 of its potential returns per unit of risk. Danang Port JSC is currently generating about 0.03 per unit of risk. If you would invest  2,604,546  in Duc Thanh Wood on September 12, 2024 and sell it today you would earn a total of  105,454  from holding Duc Thanh Wood or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Duc Thanh Wood  vs.  Danang Port JSC

Duc Thanh Wood

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Duc Thanh Wood are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Duc Thanh is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Danang Port JSC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Danang Port JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Danang Port is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Duc Thanh and Danang Port

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

The idea behind Duc Thanh Wood and Danang Port 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.