Correlation Between Binh Duong and Din Capital

Can any of the company-specific risk be diversified away by investing in both Binh Duong and Din Capital 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 Din Capital 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 Din Capital Investment, you can compare the effects of market volatilities on Binh Duong and Din Capital 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 Din Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Duong and Din Capital.

Diversification Opportunities for Binh Duong and Din Capital

0.42

Correlation Coefficient

Binh Duong  Din Capital

Very weak diversification

The 3 months correlation between Binh and Din is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Binh Duong Trade and Din Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Din Capital Investment 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 Din Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Din Capital Investment has no effect on the direction of Binh Duong i.e., Binh Duong and Din Capital go up and down completely randomly.

Pair Corralation between Binh Duong and Din Capital

Assuming the 90 days trading horizon Binh Duong is expected to generate 2.31 times less return on investment than Din Capital. But when comparing it to its historical volatility, Binh Duong Trade is 1.09 times less risky than Din Capital. It trades about 0.06 of its potential returns per unit of risk. Din Capital Investment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  910,000  in Din Capital Investment on September 16, 2024 and sell it today you would earn a total of  110,000  from holding Din Capital Investment or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Binh Duong Trade  vs.  Din Capital Investment

Binh Duong Trade

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Binh Duong Trade are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Binh Duong is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Din Capital Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Din Capital Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Din Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binh Duong and Din Capital

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

The idea behind Binh Duong Trade and Din Capital Investment 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.