Correlation Between Din Capital and Dong Nai

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

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

Diversification Opportunities for Din Capital and Dong Nai

-0.56

Correlation Coefficient

Din Capital  Dong Nai

Excellent diversification

The 3 months correlation between Din and Dong is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment and Dong Nai Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Nai Plastic and Din Capital 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 Din Capital Investment are associated (or correlated) with Dong Nai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Nai Plastic has no effect on the direction of Din Capital i.e., Din Capital and Dong Nai go up and down completely randomly.

Pair Corralation between Din Capital and Dong Nai

Assuming the 90 days trading horizon Din Capital Investment is expected to generate 0.37 times more return on investment than Dong Nai. However, Din Capital Investment is 2.68 times less risky than Dong Nai. It trades about 0.19 of its potential returns per unit of risk. Dong Nai Plastic is currently generating about -0.01 per unit of risk. If you would invest  980,000  in Din Capital Investment on September 24, 2024 and sell it today you would earn a total of  30,000  from holding Din Capital Investment or generate 3.06% return on investment over 90 days.

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

Din Capital Investment  vs.  Dong Nai Plastic

Din Capital Investment

Risk-Adjusted Performance

8 of 100

OK

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

Dong Nai Plastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dong Nai Plastic 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Din Capital and Dong Nai

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

The idea behind Din Capital Investment and Dong Nai Plastic 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.