Correlation Between Construction and Danang Rubber

Can any of the company-specific risk be diversified away by investing in both Construction and Danang Rubber 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 Danang Rubber 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 Danang Rubber JSC, you can compare the effects of market volatilities on Construction and Danang Rubber 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 Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction and Danang Rubber.

Diversification Opportunities for Construction and Danang Rubber

0.05

Correlation Coefficient

Construction  Danang Rubber

Significant diversification

The 3 months correlation between Construction and Danang is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Construction And Investment and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber JSC 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 Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of Construction i.e., Construction and Danang Rubber go up and down completely randomly.

Pair Corralation between Construction and Danang Rubber

Assuming the 90 days trading horizon Construction And Investment is expected to under-perform the Danang Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Construction And Investment is 1.02 times less risky than Danang Rubber. The stock trades about -0.16 of its potential returns per unit of risk. The Danang Rubber JSC is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,826,270  in Danang Rubber JSC on October 11, 2024 and sell it today you would lose (66,270) from holding Danang Rubber JSC or give up 2.34% of portfolio value over 90 days.

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

Construction And Investment  vs.  Danang Rubber JSC

Construction And Inv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Construction And Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Danang Rubber JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Construction and Danang Rubber

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

The idea behind Construction And Investment and Danang Rubber 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.