Correlation Between Hanoi Beer and Van Dien

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

Diversification Opportunities for Hanoi Beer and Van Dien

0.31

Correlation Coefficient

Hanoi Beer  Van Dien

Weak diversification

The 3 months correlation between Hanoi and Van is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Beer Trading and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused 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 Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Hanoi Beer i.e., Hanoi Beer and Van Dien go up and down completely randomly.

Pair Corralation between Hanoi Beer and Van Dien

Assuming the 90 days trading horizon Hanoi Beer Trading is expected to generate 1.03 times more return on investment than Van Dien. However, Hanoi Beer is 1.03 times more volatile than Van Dien Fused. It trades about 0.09 of its potential returns per unit of risk. Van Dien Fused is currently generating about 0.06 per unit of risk. If you would invest  1,821,191  in Hanoi Beer Trading on October 9, 2024 and sell it today you would earn a total of  2,368,809  from holding Hanoi Beer Trading or generate 130.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.14%
Values	Daily Returns

Hanoi Beer Trading  vs.  Van Dien Fused

Hanoi Beer Trading

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Hanoi Beer Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Hanoi Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Van Dien Fused

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hanoi Beer and Van Dien

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

The idea behind Hanoi Beer Trading and Van Dien Fused 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.