Correlation Between Sea Air and Binhthuan Agriculture

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

By analyzing existing cross correlation between Sea Air Freight and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Sea Air and Binhthuan Agriculture 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 Sea Air with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Air and Binhthuan Agriculture.

Diversification Opportunities for Sea Air and Binhthuan Agriculture

-0.38

Correlation Coefficient

Sea Air  Binhthuan Agriculture

Very good diversification

The 3 months correlation between Sea and Binhthuan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sea Air Freight and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Sea Air 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 Sea Air Freight are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Sea Air i.e., Sea Air and Binhthuan Agriculture go up and down completely randomly.

Pair Corralation between Sea Air and Binhthuan Agriculture

Assuming the 90 days trading horizon Sea Air Freight is expected to generate 0.84 times more return on investment than Binhthuan Agriculture. However, Sea Air Freight is 1.2 times less risky than Binhthuan Agriculture. It trades about 0.01 of its potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about -0.1 per unit of risk. If you would invest  2,906,314  in Sea Air Freight on December 22, 2024 and sell it today you would earn a total of  13,686  from holding Sea Air Freight or generate 0.47% return on investment over 90 days.

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

Sea Air Freight  vs.  Binhthuan Agriculture Services

Sea Air Freight

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Air Freight are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Sea Air is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Binhthuan Agriculture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Binhthuan Agriculture Services 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.

Pair Trading with Sea Air and Binhthuan Agriculture

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

The idea behind Sea Air Freight and Binhthuan Agriculture Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.