Correlation Between Hai An and Duc Thanh

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

Diversification Opportunities for Hai An and Duc Thanh

-0.09

Correlation Coefficient

Hai An  Duc Thanh

Good diversification

The 3 months correlation between Hai and Duc is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport 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 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 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 Hai An i.e., Hai An and Duc Thanh go up and down completely randomly.

Pair Corralation between Hai An and Duc Thanh

Assuming the 90 days trading horizon Hai An Transport is expected to generate 1.49 times more return on investment than Duc Thanh. However, Hai An is 1.49 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 -0.25 per unit of risk. If you would invest  4,990,000  in Hai An Transport on December 25, 2024 and sell it today you would earn a total of  80,000  from holding Hai An Transport or generate 1.6% return on investment over 90 days.

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

Hai An Transport  vs.  Duc Thanh Wood

Hai An Transport

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hai An Transport are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Hai An 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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hai An and Duc Thanh

The main advantage of trading using opposite Hai An and Duc Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hai An 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 Hai An Transport 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.