Correlation Between Duc Thanh and HVC Investment

Can any of the company-specific risk be diversified away by investing in both Duc Thanh and HVC Investment 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 HVC Investment 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 HVC Investment and, you can compare the effects of market volatilities on Duc Thanh and HVC Investment 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 HVC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duc Thanh and HVC Investment.

Diversification Opportunities for Duc Thanh and HVC Investment

0.28

Correlation Coefficient

Duc Thanh  HVC Investment

Modest diversification

The 3 months correlation between Duc and HVC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Duc Thanh Wood and HVC Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HVC Investment 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 HVC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HVC Investment has no effect on the direction of Duc Thanh i.e., Duc Thanh and HVC Investment go up and down completely randomly.

Pair Corralation between Duc Thanh and HVC Investment

Assuming the 90 days trading horizon Duc Thanh Wood is expected to under-perform the HVC Investment. But the stock apears to be less risky and, when comparing its historical volatility, Duc Thanh Wood is 1.74 times less risky than HVC Investment. The stock trades about -0.14 of its potential returns per unit of risk. The HVC Investment and is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,019,857  in HVC Investment and on December 19, 2024 and sell it today you would lose (90,857) from holding HVC Investment and or give up 8.91% of portfolio value over 90 days.

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

Duc Thanh Wood  vs.  HVC Investment and

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.

HVC Investment

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Duc Thanh Wood and HVC Investment and 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.