Correlation Between Thong Nhat and Fecon Mining

Can any of the company-specific risk be diversified away by investing in both Thong Nhat and Fecon Mining 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 Fecon Mining 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 Fecon Mining JSC, you can compare the effects of market volatilities on Thong Nhat and Fecon Mining 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 Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thong Nhat and Fecon Mining.

Diversification Opportunities for Thong Nhat and Fecon Mining

0.25

Correlation Coefficient

Thong Nhat  Fecon Mining

Modest diversification

The 3 months correlation between Thong and Fecon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Thong Nhat Rubber and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC 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 Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Thong Nhat i.e., Thong Nhat and Fecon Mining go up and down completely randomly.

Pair Corralation between Thong Nhat and Fecon Mining

Assuming the 90 days trading horizon Thong Nhat Rubber is expected to under-perform the Fecon Mining. In addition to that, Thong Nhat is 1.38 times more volatile than Fecon Mining JSC. It trades about -0.02 of its total potential returns per unit of risk. Fecon Mining JSC is currently generating about 0.03 per unit of volatility. If you would invest  362,000  in Fecon Mining JSC on December 29, 2024 and sell it today you would earn a total of  12,000  from holding Fecon Mining JSC or generate 3.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.58%
Values	Daily Returns

Thong Nhat Rubber  vs.  Fecon Mining JSC

Thong Nhat Rubber

Risk-Adjusted Performance

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 very healthy fundamental indicators, Thong Nhat is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fecon Mining JSC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fecon Mining JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Fecon Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Thong Nhat and Fecon Mining

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

The idea behind Thong Nhat Rubber and Fecon Mining JSC 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.