Correlation Between Pha Le and Thien Long

Can any of the company-specific risk be diversified away by investing in both Pha Le and Thien Long 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 Thien Long 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 Thien Long Group, you can compare the effects of market volatilities on Pha Le and Thien Long 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 Thien Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Thien Long.

Diversification Opportunities for Pha Le and Thien Long

-0.35

Correlation Coefficient

Pha Le  Thien Long

Very good diversification

The 3 months correlation between Pha and Thien is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Thien Long Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thien Long Group 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 Thien Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thien Long Group has no effect on the direction of Pha Le i.e., Pha Le and Thien Long go up and down completely randomly.

Pair Corralation between Pha Le and Thien Long

Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 0.85 times more return on investment than Thien Long. However, Pha Le Plastics is 1.18 times less risky than Thien Long. It trades about 0.11 of its potential returns per unit of risk. Thien Long Group is currently generating about 0.07 per unit of risk. If you would invest  456,000  in Pha Le Plastics on October 6, 2024 and sell it today you would earn a total of  44,000  from holding Pha Le Plastics or generate 9.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Pha Le Plastics  vs.  Thien Long Group

Pha Le Plastics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pha Le Plastics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Pha Le is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Thien Long Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thien Long Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Thien Long displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pha Le and Thien Long

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

The idea behind Pha Le Plastics and Thien Long Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.