Correlation Between Thu Duc and Van Dien

Can any of the company-specific risk be diversified away by investing in both Thu Duc and Van Dien 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 Thu Duc and Van Dien into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thu Duc TradingImport and Van Dien Fused, you can compare the effects of market volatilities on Thu Duc and Van Dien 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 Thu Duc with a short position of Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thu Duc and Van Dien.

Diversification Opportunities for Thu Duc and Van Dien

-0.51

Correlation Coefficient

Thu Duc  Van Dien

Excellent diversification

The 3 months correlation between Thu and Van is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Thu Duc TradingImport and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused and Thu Duc 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 Thu Duc TradingImport are associated (or correlated) with Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Thu Duc i.e., Thu Duc and Van Dien go up and down completely randomly.

Pair Corralation between Thu Duc and Van Dien

Assuming the 90 days trading horizon Thu Duc TradingImport is expected to generate 0.36 times more return on investment than Van Dien. However, Thu Duc TradingImport is 2.81 times less risky than Van Dien. It trades about 0.22 of its potential returns per unit of risk. Van Dien Fused is currently generating about 0.0 per unit of risk. If you would invest  820,000  in Thu Duc TradingImport on October 11, 2024 and sell it today you would earn a total of  40,000  from holding Thu Duc TradingImport or generate 4.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

Thu Duc TradingImport  vs.  Van Dien Fused

Thu Duc TradingImport

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thu Duc TradingImport are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Thu Duc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Van Dien Fused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Van Dien Fused has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Thu Duc and Van Dien

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

The idea behind Thu Duc TradingImport and Van Dien Fused 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.