Correlation Between Pha Lai and Duc Thanh

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

By analyzing existing cross correlation between Pha Lai Thermal and Duc Thanh Wood, you can compare the effects of market volatilities on Pha Lai and Duc Thanh 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 Lai with a short position of Duc Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Duc Thanh.

Diversification Opportunities for Pha Lai and Duc Thanh

-0.42

Correlation Coefficient

Pha Lai  Duc Thanh

Very good diversification

The 3 months correlation between Pha and Duc is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Duc Thanh Wood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duc Thanh Wood and Pha Lai 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 Lai Thermal are associated (or correlated) with Duc Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duc Thanh Wood has no effect on the direction of Pha Lai i.e., Pha Lai and Duc Thanh go up and down completely randomly.

Pair Corralation between Pha Lai and Duc Thanh

Assuming the 90 days trading horizon Pha Lai Thermal is expected to under-perform the Duc Thanh. But the stock apears to be less risky and, when comparing its historical volatility, Pha Lai Thermal is 3.39 times less risky than Duc Thanh. The stock trades about -0.4 of its potential returns per unit of risk. The Duc Thanh Wood is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,660,000  in Duc Thanh Wood on October 10, 2024 and sell it today you would lose (60,000) from holding Duc Thanh Wood or give up 2.26% of portfolio value over 90 days.

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

Pha Lai Thermal  vs.  Duc Thanh Wood

Pha Lai Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pha Lai Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Duc Thanh Wood

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Pha Lai and Duc Thanh

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

The idea behind Pha Lai Thermal and Duc Thanh Wood 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.