Correlation Between Thien Long and 577 Investment

Can any of the company-specific risk be diversified away by investing in both Thien Long and 577 Investment 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 Thien Long and 577 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thien Long Group and 577 Investment Corp, you can compare the effects of market volatilities on Thien Long and 577 Investment 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 Thien Long with a short position of 577 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thien Long and 577 Investment.

Diversification Opportunities for Thien Long and 577 Investment

-0.28

Correlation Coefficient

Thien Long  577 Investment

Very good diversification

The 3 months correlation between Thien and 577 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Thien Long Group and 577 Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 577 Investment Corp and Thien Long 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 Thien Long Group are associated (or correlated) with 577 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 577 Investment Corp has no effect on the direction of Thien Long i.e., Thien Long and 577 Investment go up and down completely randomly.

Pair Corralation between Thien Long and 577 Investment

Assuming the 90 days trading horizon Thien Long is expected to generate 2.28 times less return on investment than 577 Investment. But when comparing it to its historical volatility, Thien Long Group is 1.31 times less risky than 577 Investment. It trades about 0.04 of its potential returns per unit of risk. 577 Investment Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,290,000  in 577 Investment Corp on October 4, 2024 and sell it today you would earn a total of  970,000  from holding 577 Investment Corp or generate 75.19% return on investment over 90 days.

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

Thien Long Group  vs.  577 Investment Corp

Thien Long Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thien Long Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Thien Long displayed solid returns over the last few months and may actually be approaching a breakup point.

577 Investment Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 577 Investment Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, 577 Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Thien Long and 577 Investment

The main advantage of trading using opposite Thien Long and 577 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thien Long position performs unexpectedly, 577 Investment 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 577 Investment will offset losses from the drop in 577 Investment's long position.

The idea behind Thien Long Group and 577 Investment Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.