Correlation Between Thong Nhat and Binhthuan Agriculture

Can any of the company-specific risk be diversified away by investing in both Thong Nhat and Binhthuan Agriculture 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 Thong Nhat and Binhthuan Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thong Nhat Rubber and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Thong Nhat and Binhthuan Agriculture 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 Thong Nhat with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thong Nhat and Binhthuan Agriculture.

Diversification Opportunities for Thong Nhat and Binhthuan Agriculture

-0.74

Correlation Coefficient

Thong Nhat  Binhthuan Agriculture

Pay attention - limited upside

The 3 months correlation between Thong and Binhthuan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Thong Nhat Rubber and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Thong Nhat 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 Thong Nhat Rubber are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Thong Nhat i.e., Thong Nhat and Binhthuan Agriculture go up and down completely randomly.

Pair Corralation between Thong Nhat and Binhthuan Agriculture

Assuming the 90 days trading horizon Thong Nhat Rubber is expected to under-perform the Binhthuan Agriculture. In addition to that, Thong Nhat is 1.64 times more volatile than Binhthuan Agriculture Services. It trades about -0.04 of its total potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about 0.19 per unit of volatility. If you would invest  373,000  in Binhthuan Agriculture Services on October 6, 2024 and sell it today you would earn a total of  92,000  from holding Binhthuan Agriculture Services or generate 24.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.47%
Values	Daily Returns

Thong Nhat Rubber  vs.  Binhthuan Agriculture Services

Thong Nhat Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thong Nhat Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Binhthuan Agriculture

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Thong Nhat and Binhthuan Agriculture

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

The idea behind Thong Nhat Rubber and Binhthuan Agriculture Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.