Correlation Between South Books and Binh Thuan

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

By analyzing existing cross correlation between South Books Educational and Binh Thuan Books, you can compare the effects of market volatilities on South Books and Binh Thuan 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 South Books with a short position of Binh Thuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Books and Binh Thuan.

Diversification Opportunities for South Books and Binh Thuan

0.46

Correlation Coefficient

South Books  Binh Thuan

Very weak diversification

The 3 months correlation between South and Binh is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding South Books Educational and Binh Thuan Books in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Thuan Books and South Books 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 South Books Educational are associated (or correlated) with Binh Thuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Thuan Books has no effect on the direction of South Books i.e., South Books and Binh Thuan go up and down completely randomly.

Pair Corralation between South Books and Binh Thuan

Assuming the 90 days trading horizon South Books Educational is expected to generate 0.58 times more return on investment than Binh Thuan. However, South Books Educational is 1.71 times less risky than Binh Thuan. It trades about 0.04 of its potential returns per unit of risk. Binh Thuan Books is currently generating about 0.02 per unit of risk. If you would invest  1,258,919  in South Books Educational on December 20, 2024 and sell it today you would earn a total of  41,081  from holding South Books Educational or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.18%
Values	Daily Returns

South Books Educational  vs.  Binh Thuan Books

South Books Educational

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in South Books Educational are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, South Books may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Binh Thuan Books

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Binh Thuan Books are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Binh Thuan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with South Books and Binh Thuan

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

The idea behind South Books Educational and Binh Thuan Books 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.