Correlation Between Picomat Plastic and Vu Dang

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

By analyzing existing cross correlation between Picomat Plastic JSC and Vu Dang Investment, you can compare the effects of market volatilities on Picomat Plastic and Vu Dang 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 Picomat Plastic with a short position of Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Picomat Plastic and Vu Dang.

Diversification Opportunities for Picomat Plastic and Vu Dang

0.43

Correlation Coefficient

Picomat Plastic  Vu Dang

Very weak diversification

The 3 months correlation between Picomat and SVD is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Picomat Plastic JSC and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment and Picomat Plastic 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 Picomat Plastic JSC are associated (or correlated) with Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of Picomat Plastic i.e., Picomat Plastic and Vu Dang go up and down completely randomly.

Pair Corralation between Picomat Plastic and Vu Dang

Assuming the 90 days trading horizon Picomat Plastic JSC is expected to generate 0.8 times more return on investment than Vu Dang. However, Picomat Plastic JSC is 1.25 times less risky than Vu Dang. It trades about 0.08 of its potential returns per unit of risk. Vu Dang Investment is currently generating about 0.05 per unit of risk. If you would invest  990,000  in Picomat Plastic JSC on September 20, 2024 and sell it today you would earn a total of  260,000  from holding Picomat Plastic JSC or generate 26.26% return on investment over 90 days.

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

Picomat Plastic JSC  vs.  Vu Dang Investment

Picomat Plastic JSC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Picomat Plastic JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Picomat Plastic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vu Dang Investment

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vu Dang Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Vu Dang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Picomat Plastic and Vu Dang

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

The idea behind Picomat Plastic JSC and Vu Dang Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.