Correlation Between Pha Le and Vu Dang

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

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

Diversification Opportunities for Pha Le and Vu Dang

-0.52

Correlation Coefficient

Pha Le  Vu Dang

Excellent diversification

The 3 months correlation between Pha and SVD is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics 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 Pha Le 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 Pha Le Plastics 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 Pha Le i.e., Pha Le and Vu Dang go up and down completely randomly.

Pair Corralation between Pha Le and Vu Dang

Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 0.84 times more return on investment than Vu Dang. However, Pha Le Plastics is 1.19 times less risky than Vu Dang. It trades about 0.09 of its potential returns per unit of risk. Vu Dang Investment is currently generating about -0.02 per unit of risk. If you would invest  455,000  in Pha Le Plastics on December 18, 2024 and sell it today you would earn a total of  34,000  from holding Pha Le Plastics or generate 7.47% return on investment over 90 days.

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

Pha Le Plastics  vs.  Vu Dang Investment

Pha Le Plastics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pha Le Plastics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pha Le may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vu Dang Investment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Pha Le and Vu Dang

The main advantage of trading using opposite Pha Le and Vu Dang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le 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 Pha Le Plastics 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.