Correlation Between Hai An and BIDV Insurance

Can any of the company-specific risk be diversified away by investing in both Hai An and BIDV Insurance 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 Hai An and BIDV Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hai An Transport and BIDV Insurance Corp, you can compare the effects of market volatilities on Hai An and BIDV Insurance 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 Hai An with a short position of BIDV Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and BIDV Insurance.

Diversification Opportunities for Hai An and BIDV Insurance

0.84

Correlation Coefficient

Hai An  BIDV Insurance

Very poor diversification

The 3 months correlation between Hai and BIDV is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and BIDV Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Insurance Corp and Hai An 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 Hai An Transport are associated (or correlated) with BIDV Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Insurance Corp has no effect on the direction of Hai An i.e., Hai An and BIDV Insurance go up and down completely randomly.

Pair Corralation between Hai An and BIDV Insurance

Assuming the 90 days trading horizon Hai An Transport is expected to generate 1.21 times more return on investment than BIDV Insurance. However, Hai An is 1.21 times more volatile than BIDV Insurance Corp. It trades about 0.24 of its potential returns per unit of risk. BIDV Insurance Corp is currently generating about 0.1 per unit of risk. If you would invest  3,925,000  in Hai An Transport on September 13, 2024 and sell it today you would earn a total of  1,145,000  from holding Hai An Transport or generate 29.17% return on investment over 90 days.

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

Hai An Transport  vs.  BIDV Insurance Corp

Hai An Transport

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hai An Transport are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Hai An displayed solid returns over the last few months and may actually be approaching a breakup point.

BIDV Insurance Corp

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIDV Insurance Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BIDV Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hai An and BIDV Insurance

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

The idea behind Hai An Transport and BIDV Insurance Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.