Correlation Between Tien Giang and Binh Duong

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

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

Diversification Opportunities for Tien Giang and Binh Duong

0.85

Correlation Coefficient

Tien Giang  Binh Duong

Very poor diversification

The 3 months correlation between Tien and Binh is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tien Giang Investment and Binh Duong Trade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Trade and Tien Giang 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 Tien Giang Investment are associated (or correlated) with Binh Duong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Duong Trade has no effect on the direction of Tien Giang i.e., Tien Giang and Binh Duong go up and down completely randomly.

Pair Corralation between Tien Giang and Binh Duong

Assuming the 90 days trading horizon Tien Giang Investment is expected to generate 1.47 times more return on investment than Binh Duong. However, Tien Giang is 1.47 times more volatile than Binh Duong Trade. It trades about 0.49 of its potential returns per unit of risk. Binh Duong Trade is currently generating about 0.24 per unit of risk. If you would invest  4,352,200  in Tien Giang Investment on October 11, 2024 and sell it today you would earn a total of  617,800  from holding Tien Giang Investment or generate 14.2% return on investment over 90 days.

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

Tien Giang Investment  vs.  Binh Duong Trade

Tien Giang Investment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tien Giang Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Tien Giang displayed solid returns over the last few months and may actually be approaching a breakup point.

Binh Duong Trade

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Binh Duong Trade are ranked lower than 16 (%) 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.

Pair Trading with Tien Giang and Binh Duong

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

The idea behind Tien Giang Investment and Binh Duong Trade 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.