Correlation Between Long An and Van Dien

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

By analyzing existing cross correlation between Long An Food and Van Dien Fused, you can compare the effects of market volatilities on Long An and Van 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 Long An with a short position of Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long An and Van Dien.

Diversification Opportunities for Long An and Van Dien

0.25

Correlation Coefficient

Long An  Van Dien

Modest diversification

The 3 months correlation between Long and Van is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Long An Food and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused and Long An 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 Long An Food are associated (or correlated) with Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Long An i.e., Long An and Van Dien go up and down completely randomly.

Pair Corralation between Long An and Van Dien

Assuming the 90 days trading horizon Long An Food is expected to generate 0.25 times more return on investment than Van Dien. However, Long An Food is 4.01 times less risky than Van Dien. It trades about 0.16 of its potential returns per unit of risk. Van Dien Fused is currently generating about -0.07 per unit of risk. If you would invest  1,745,000  in Long An Food on October 12, 2024 and sell it today you would earn a total of  70,000  from holding Long An Food or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.95%
Values	Daily Returns

Long An Food  vs.  Van Dien Fused

Long An Food

Risk-Adjusted Performance

8 of 100

OK

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

Van Dien Fused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Van Dien Fused has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Long An and Van Dien

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

The idea behind Long An Food and Van Dien Fused 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.