Correlation Between Binh Duong and DIC Holdings

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

By analyzing existing cross correlation between Binh Duong Trade and DIC Holdings Construction, you can compare the effects of market volatilities on Binh Duong and DIC Holdings 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 Binh Duong with a short position of DIC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Duong and DIC Holdings.

Diversification Opportunities for Binh Duong and DIC Holdings

-0.16

Correlation Coefficient

Binh Duong  DIC Holdings

Good diversification

The 3 months correlation between Binh and DIC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Binh Duong Trade and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction and Binh Duong 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 Binh Duong Trade are associated (or correlated) with DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of Binh Duong i.e., Binh Duong and DIC Holdings go up and down completely randomly.

Pair Corralation between Binh Duong and DIC Holdings

Assuming the 90 days trading horizon Binh Duong is expected to generate 4.9 times less return on investment than DIC Holdings. In addition to that, Binh Duong is 1.06 times more volatile than DIC Holdings Construction. It trades about 0.07 of its total potential returns per unit of risk. DIC Holdings Construction is currently generating about 0.35 per unit of volatility. If you would invest  1,080,000  in DIC Holdings Construction on December 5, 2024 and sell it today you would earn a total of  185,000  from holding DIC Holdings Construction or generate 17.13% return on investment over 90 days.

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

Binh Duong Trade  vs.  DIC Holdings Construction

Binh Duong Trade

Risk-Adjusted Performance

Good

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

DIC Holdings Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days DIC Holdings Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, DIC Holdings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Binh Duong and DIC Holdings

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

The idea behind Binh Duong Trade and DIC Holdings Construction 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.