Correlation Between Binh Thanh and Vu Dang

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

By analyzing existing cross correlation between Binh Thanh Import and Vu Dang Investment, you can compare the effects of market volatilities on Binh Thanh and Vu Dang 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 Binh Thanh with a short position of Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Thanh and Vu Dang.

Diversification Opportunities for Binh Thanh and Vu Dang

0.05

Correlation Coefficient

Binh Thanh  Vu Dang

Significant diversification

The 3 months correlation between Binh and SVD is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Binh Thanh Import and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment and Binh 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 Binh Thanh Import are associated (or correlated) with Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of Binh Thanh i.e., Binh Thanh and Vu Dang go up and down completely randomly.

Pair Corralation between Binh Thanh and Vu Dang

Assuming the 90 days trading horizon Binh Thanh Import is expected to under-perform the Vu Dang. In addition to that, Binh Thanh is 1.29 times more volatile than Vu Dang Investment. It trades about -0.55 of its total potential returns per unit of risk. Vu Dang Investment is currently generating about -0.12 per unit of volatility. If you would invest  328,000  in Vu Dang Investment on October 22, 2024 and sell it today you would lose (13,000) from holding Vu Dang Investment or give up 3.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Binh Thanh Import  vs.  Vu Dang Investment

Binh Thanh Import

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Binh Thanh Import has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vu Dang Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Binh Thanh and Vu Dang

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

The idea behind Binh Thanh Import and Vu Dang Investment 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.