Correlation Between HNX 30 and Khang Dien

Can any of the company-specific risk be diversified away by investing in both HNX 30 and Khang 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 HNX 30 and Khang Dien into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HNX 30 and Khang Dien House, you can compare the effects of market volatilities on HNX 30 and Khang 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 HNX 30 with a short position of Khang Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNX 30 and Khang Dien.

Diversification Opportunities for HNX 30 and Khang Dien

0.77

Correlation Coefficient

HNX 30  Khang Dien

Poor diversification

The 3 months correlation between HNX and Khang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding HNX 30 and Khang Dien House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khang Dien House and HNX 30 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 HNX 30 are associated (or correlated) with Khang Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khang Dien House has no effect on the direction of HNX 30 i.e., HNX 30 and Khang Dien go up and down completely randomly.

Pair Corralation between HNX 30 and Khang Dien

Assuming the 90 days trading horizon HNX 30 is expected to generate 3.89 times less return on investment than Khang Dien. In addition to that, HNX 30 is 1.17 times more volatile than Khang Dien House. It trades about 0.13 of its total potential returns per unit of risk. Khang Dien House is currently generating about 0.58 per unit of volatility. If you would invest  3,280,000  in Khang Dien House on September 26, 2024 and sell it today you would earn a total of  315,000  from holding Khang Dien House or generate 9.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

HNX 30  vs.  Khang Dien House

Pair Trading with HNX 30 and Khang Dien

The main advantage of trading using opposite HNX 30 and Khang Dien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNX 30 position performs unexpectedly, Khang 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 Khang Dien will offset losses from the drop in Khang Dien's long position.

The idea behind HNX 30 and Khang Dien House 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.