Correlation Between HNX 30 and Thu Duc

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

By analyzing existing cross correlation between HNX 30 and Thu Duc TradingImport, you can compare the effects of market volatilities on HNX 30 and Thu Duc 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 Thu Duc. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNX 30 and Thu Duc.

Diversification Opportunities for HNX 30 and Thu Duc

0.02

Correlation Coefficient

HNX 30  Thu Duc

Significant diversification

The 3 months correlation between HNX and Thu is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding HNX 30 and Thu Duc TradingImport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thu Duc TradingImport 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 Thu Duc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thu Duc TradingImport has no effect on the direction of HNX 30 i.e., HNX 30 and Thu Duc go up and down completely randomly.

Pair Corralation between HNX 30 and Thu Duc

Assuming the 90 days trading horizon HNX 30 is expected to generate 0.68 times more return on investment than Thu Duc. However, HNX 30 is 1.46 times less risky than Thu Duc. It trades about 0.03 of its potential returns per unit of risk. Thu Duc TradingImport is currently generating about -0.02 per unit of risk. If you would invest  37,887  in HNX 30 on October 12, 2024 and sell it today you would earn a total of  8,179  from holding HNX 30 or generate 21.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	46.33%
Values	Daily Returns

HNX 30  vs.  Thu Duc TradingImport

Pair Trading with HNX 30 and Thu Duc

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

The idea behind HNX 30 and Thu Duc TradingImport 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.