Correlation Between Phuoc Hoa and Military Insurance

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

By analyzing existing cross correlation between Phuoc Hoa Rubber and Military Insurance Corp, you can compare the effects of market volatilities on Phuoc Hoa and Military Insurance 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 Phuoc Hoa with a short position of Military Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phuoc Hoa and Military Insurance.

Diversification Opportunities for Phuoc Hoa and Military Insurance

0.63

Correlation Coefficient

Phuoc Hoa  Military Insurance

Poor diversification

The 3 months correlation between Phuoc and Military is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Phuoc Hoa Rubber and Military Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Military Insurance Corp and Phuoc Hoa 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 Phuoc Hoa Rubber are associated (or correlated) with Military Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Military Insurance Corp has no effect on the direction of Phuoc Hoa i.e., Phuoc Hoa and Military Insurance go up and down completely randomly.

Pair Corralation between Phuoc Hoa and Military Insurance

Assuming the 90 days trading horizon Phuoc Hoa Rubber is expected to generate 1.02 times more return on investment than Military Insurance. However, Phuoc Hoa is 1.02 times more volatile than Military Insurance Corp. It trades about 0.16 of its potential returns per unit of risk. Military Insurance Corp is currently generating about -0.02 per unit of risk. If you would invest  5,690,000  in Phuoc Hoa Rubber on December 2, 2024 and sell it today you would earn a total of  920,000  from holding Phuoc Hoa Rubber or generate 16.17% return on investment over 90 days.

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

Phuoc Hoa Rubber  vs.  Military Insurance Corp

Phuoc Hoa Rubber

Risk-Adjusted Performance

Good

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

Military Insurance Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Phuoc Hoa and Military Insurance

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

The idea behind Phuoc Hoa Rubber and Military Insurance Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.