Correlation Between Ho Chi and Hanoi Beer

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

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

Diversification Opportunities for Ho Chi and Hanoi Beer

-0.05

Correlation Coefficient

Ho Chi  Hanoi Beer

Good diversification

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

Pair Corralation between Ho Chi and Hanoi Beer

Assuming the 90 days trading horizon Ho Chi Minh is expected to generate 1.34 times more return on investment than Hanoi Beer. However, Ho Chi is 1.34 times more volatile than Hanoi Beer Alcohol. It trades about 0.27 of its potential returns per unit of risk. Hanoi Beer Alcohol is currently generating about -0.2 per unit of risk. If you would invest  2,225,000  in Ho Chi Minh on October 6, 2024 and sell it today you would earn a total of  285,000  from holding Ho Chi Minh or generate 12.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Ho Chi Minh  vs.  Hanoi Beer Alcohol

Ho Chi Minh

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hanoi Beer Alcohol

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ho Chi and Hanoi Beer

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

The idea behind Ho Chi Minh and Hanoi Beer Alcohol 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.