Correlation Between Construction and Binhthuan Agriculture

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

By analyzing existing cross correlation between Construction And Investment and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Construction and Binhthuan Agriculture 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 Construction with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction and Binhthuan Agriculture.

Diversification Opportunities for Construction and Binhthuan Agriculture

-0.06

Correlation Coefficient

Construction  Binhthuan Agriculture

Good diversification

The 3 months correlation between Construction and Binhthuan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Construction And Investment and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Construction 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 Construction And Investment are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Construction i.e., Construction and Binhthuan Agriculture go up and down completely randomly.

Pair Corralation between Construction and Binhthuan Agriculture

Assuming the 90 days trading horizon Construction is expected to generate 9.68 times less return on investment than Binhthuan Agriculture. But when comparing it to its historical volatility, Construction And Investment is 2.3 times less risky than Binhthuan Agriculture. It trades about 0.09 of its potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  379,000  in Binhthuan Agriculture Services on September 16, 2024 and sell it today you would earn a total of  91,000  from holding Binhthuan Agriculture Services or generate 24.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Construction And Investment  vs.  Binhthuan Agriculture Services

Construction And Inv

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Construction And Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction displayed solid returns over the last few months and may actually be approaching a breakup point.

Binhthuan Agriculture

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Binhthuan Agriculture Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binhthuan Agriculture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Construction and Binhthuan Agriculture

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

The idea behind Construction And Investment and Binhthuan Agriculture Services 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.