Correlation Between Construction JSC and Thanh Thanh

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

By analyzing existing cross correlation between Construction JSC No5 and Thanh Thanh Cong, you can compare the effects of market volatilities on Construction JSC and Thanh 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 Construction JSC with a short position of Thanh Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction JSC and Thanh Thanh.

Diversification Opportunities for Construction JSC and Thanh Thanh

-0.19

Correlation Coefficient

Construction JSC  Thanh Thanh

Good diversification

The 3 months correlation between Construction and Thanh is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 and Thanh Thanh Cong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Thanh Cong and Construction JSC 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 Construction JSC No5 are associated (or correlated) with Thanh Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Thanh Cong has no effect on the direction of Construction JSC i.e., Construction JSC and Thanh Thanh go up and down completely randomly.

Pair Corralation between Construction JSC and Thanh Thanh

Assuming the 90 days trading horizon Construction JSC No5 is expected to under-perform the Thanh Thanh. In addition to that, Construction JSC is 3.13 times more volatile than Thanh Thanh Cong. It trades about -0.05 of its total potential returns per unit of risk. Thanh Thanh Cong is currently generating about 0.3 per unit of volatility. If you would invest  1,172,730  in Thanh Thanh Cong on December 25, 2024 and sell it today you would earn a total of  332,270  from holding Thanh Thanh Cong or generate 28.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.9%
Values	Daily Returns

Construction JSC No5  vs.  Thanh Thanh Cong

Construction JSC No5

Risk-Adjusted Performance

Very Weak

Over the last 90 days Construction JSC No5 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Thanh Thanh Cong

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thanh Thanh Cong are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Thanh Thanh displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Construction JSC and Thanh Thanh

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

The idea behind Construction JSC No5 and Thanh Thanh Cong 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.