Correlation Between Hochiminh City and Danang Port

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

By analyzing existing cross correlation between Hochiminh City Metal and Danang Port JSC, you can compare the effects of market volatilities on Hochiminh City and Danang Port 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 Hochiminh City with a short position of Danang Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Danang Port.

Diversification Opportunities for Hochiminh City and Danang Port

0.14

Correlation Coefficient

Hochiminh City  Danang Port

Average diversification

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

Pair Corralation between Hochiminh City and Danang Port

Assuming the 90 days trading horizon Hochiminh City is expected to generate 2.66 times less return on investment than Danang Port. In addition to that, Hochiminh City is 1.1 times more volatile than Danang Port JSC. It trades about 0.02 of its total potential returns per unit of risk. Danang Port JSC is currently generating about 0.05 per unit of volatility. If you would invest  3,400,000  in Danang Port JSC on December 28, 2024 and sell it today you would earn a total of  190,000  from holding Danang Port JSC or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Hochiminh City Metal  vs.  Danang Port JSC

Hochiminh City Metal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hochiminh City Metal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Hochiminh City is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Danang Port JSC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Danang Port JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Danang Port may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hochiminh City and Danang Port

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

The idea behind Hochiminh City Metal and Danang Port JSC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.