Correlation Between Thong Nhat and Thien Long

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

Diversification Opportunities for Thong Nhat and Thien Long

-0.54

Correlation Coefficient

Thong Nhat  Thien Long

Excellent diversification

The 3 months correlation between Thong and Thien is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Thong Nhat Rubber and Thien Long Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thien Long Group 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 Thien Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thien Long Group has no effect on the direction of Thong Nhat i.e., Thong Nhat and Thien Long go up and down completely randomly.

Pair Corralation between Thong Nhat and Thien Long

Assuming the 90 days trading horizon Thong Nhat Rubber is expected to generate 2.44 times more return on investment than Thien Long. However, Thong Nhat is 2.44 times more volatile than Thien Long Group. It trades about -0.02 of its potential returns per unit of risk. Thien Long Group is currently generating about -0.27 per unit of risk. If you would invest  3,315,000  in Thong Nhat Rubber on October 15, 2024 and sell it today you would lose (115,000) from holding Thong Nhat Rubber or give up 3.47% of portfolio value over 90 days.

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

Thong Nhat Rubber  vs.  Thien Long Group

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.

Thien Long Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thien Long Group are ranked lower than 9 (%) 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.

Pair Trading with Thong Nhat and Thien Long

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

The idea behind Thong Nhat Rubber and Thien Long Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.