Correlation Between Thong Nhat and Nafoods Group

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

Diversification Opportunities for Thong Nhat and Nafoods Group

-0.02

Correlation Coefficient

Thong Nhat  Nafoods Group

Good diversification

The 3 months correlation between Thong and Nafoods is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Thong Nhat Rubber and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group 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 Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of Thong Nhat i.e., Thong Nhat and Nafoods Group go up and down completely randomly.

Pair Corralation between Thong Nhat and Nafoods Group

Assuming the 90 days trading horizon Thong Nhat Rubber is expected to under-perform the Nafoods Group. In addition to that, Thong Nhat is 1.86 times more volatile than Nafoods Group JSC. It trades about -0.04 of its total potential returns per unit of risk. Nafoods Group JSC is currently generating about -0.04 per unit of volatility. If you would invest  2,145,000  in Nafoods Group JSC on September 4, 2024 and sell it today you would lose (155,000) from holding Nafoods Group JSC or give up 7.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.54%
Values	Daily Returns

Thong Nhat Rubber  vs.  Nafoods Group JSC

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.

Nafoods Group JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nafoods Group JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Nafoods Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Thong Nhat and Nafoods Group

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

The idea behind Thong Nhat Rubber and Nafoods Group 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.