Correlation Between Binh Duong and Sea Air

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

Diversification Opportunities for Binh Duong and Sea Air

0.13

Correlation Coefficient

Binh Duong  Sea Air

Average diversification

The 3 months correlation between Binh and Sea is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Binh Duong Trade and Sea Air Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Air Freight 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 Sea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Air Freight has no effect on the direction of Binh Duong i.e., Binh Duong and Sea Air go up and down completely randomly.

Pair Corralation between Binh Duong and Sea Air

Assuming the 90 days trading horizon Binh Duong Trade is expected to generate 0.82 times more return on investment than Sea Air. However, Binh Duong Trade is 1.21 times less risky than Sea Air. It trades about 0.35 of its potential returns per unit of risk. Sea Air Freight is currently generating about 0.05 per unit of risk. If you would invest  995,000  in Binh Duong Trade on September 16, 2024 and sell it today you would earn a total of  125,000  from holding Binh Duong Trade or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Binh Duong Trade  vs.  Sea Air Freight

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.

Sea Air Freight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sea Air Freight has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Binh Duong and Sea Air

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

The idea behind Binh Duong Trade and Sea Air Freight 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.