Correlation Between RangDong Plastic and Tay Ninh

Can any of the company-specific risk be diversified away by investing in both RangDong Plastic and Tay Ninh 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 RangDong Plastic and Tay Ninh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RangDong Plastic JSC and Tay Ninh Rubber, you can compare the effects of market volatilities on RangDong Plastic and Tay Ninh 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 RangDong Plastic with a short position of Tay Ninh. Check out your portfolio center. Please also check ongoing floating volatility patterns of RangDong Plastic and Tay Ninh.

Diversification Opportunities for RangDong Plastic and Tay Ninh

-0.82

Correlation Coefficient

RangDong Plastic  Tay Ninh

Pay attention - limited upside

The 3 months correlation between RangDong and Tay is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding RangDong Plastic JSC and Tay Ninh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tay Ninh Rubber and RangDong Plastic 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 RangDong Plastic JSC are associated (or correlated) with Tay Ninh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tay Ninh Rubber has no effect on the direction of RangDong Plastic i.e., RangDong Plastic and Tay Ninh go up and down completely randomly.

Pair Corralation between RangDong Plastic and Tay Ninh

Assuming the 90 days trading horizon RangDong Plastic JSC is expected to under-perform the Tay Ninh. In addition to that, RangDong Plastic is 1.5 times more volatile than Tay Ninh Rubber. It trades about -0.32 of its total potential returns per unit of risk. Tay Ninh Rubber is currently generating about 0.18 per unit of volatility. If you would invest  3,910,000  in Tay Ninh Rubber on September 2, 2024 and sell it today you would earn a total of  970,000  from holding Tay Ninh Rubber or generate 24.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

RangDong Plastic JSC  vs.  Tay Ninh Rubber

RangDong Plastic JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RangDong Plastic JSC 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.

Tay Ninh Rubber

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tay Ninh Rubber are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tay Ninh displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RangDong Plastic and Tay Ninh

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

The idea behind RangDong Plastic JSC and Tay Ninh Rubber 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.