Correlation Between Hanoi Beer and Post

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

By analyzing existing cross correlation between Hanoi Beer Trading and Post and Telecommunications, you can compare the effects of market volatilities on Hanoi Beer and Post 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 Hanoi Beer with a short position of Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanoi Beer and Post.

Diversification Opportunities for Hanoi Beer and Post

-0.14

Correlation Coefficient

Hanoi Beer  Post

Good diversification

The 3 months correlation between Hanoi and Post is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Beer Trading and Post and Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post and Telecommuni and Hanoi Beer 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 Hanoi Beer Trading are associated (or correlated) with Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post and Telecommuni has no effect on the direction of Hanoi Beer i.e., Hanoi Beer and Post go up and down completely randomly.

Pair Corralation between Hanoi Beer and Post

Assuming the 90 days trading horizon Hanoi Beer Trading is expected to generate 1.23 times more return on investment than Post. However, Hanoi Beer is 1.23 times more volatile than Post and Telecommunications. It trades about 0.12 of its potential returns per unit of risk. Post and Telecommunications is currently generating about 0.15 per unit of risk. If you would invest  4,190,000  in Hanoi Beer Trading on December 28, 2024 and sell it today you would earn a total of  730,000  from holding Hanoi Beer Trading or generate 17.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.14%
Values	Daily Returns

Hanoi Beer Trading  vs.  Post and Telecommunications

Hanoi Beer Trading

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hanoi Beer Trading are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hanoi Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

Post and Telecommuni

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Post and Telecommunications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Post displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanoi Beer and Post

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

The idea behind Hanoi Beer Trading and Post and Telecommunications 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.