Correlation Between Ha Long and Thien Long

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

By analyzing existing cross correlation between Ha Long Investment and Thien Long Group, you can compare the effects of market volatilities on Ha Long and Thien Long 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 Ha Long with a short position of Thien Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ha Long and Thien Long.

Diversification Opportunities for Ha Long and Thien Long

-0.57

Correlation Coefficient

Ha Long  Thien Long

Excellent diversification

The 3 months correlation between HID and Thien is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ha Long Investment and Thien Long Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thien Long Group and Ha Long 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 Ha Long Investment are associated (or correlated) with Thien Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thien Long Group has no effect on the direction of Ha Long i.e., Ha Long and Thien Long go up and down completely randomly.

Pair Corralation between Ha Long and Thien Long

Assuming the 90 days trading horizon Ha Long Investment is expected to under-perform the Thien Long. But the stock apears to be less risky and, when comparing its historical volatility, Ha Long Investment is 2.37 times less risky than Thien Long. The stock trades about -0.05 of its potential returns per unit of risk. The Thien Long Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  5,880,000  in Thien Long Group on September 22, 2024 and sell it today you would earn a total of  920,000  from holding Thien Long Group or generate 15.65% return on investment over 90 days.

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

Ha Long Investment  vs.  Thien Long Group

Ha Long Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thien Long Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thien Long Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Thien Long displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ha Long and Thien Long

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

The idea behind Ha Long Investment and Thien Long Group 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.