Correlation Between Transimex Transportation and Phuoc Hoa

Can any of the company-specific risk be diversified away by investing in both Transimex Transportation and Phuoc Hoa 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 Transimex Transportation and Phuoc Hoa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transimex Transportation JSC and Phuoc Hoa Rubber, you can compare the effects of market volatilities on Transimex Transportation and Phuoc Hoa 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 Transimex Transportation with a short position of Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transimex Transportation and Phuoc Hoa.

Diversification Opportunities for Transimex Transportation and Phuoc Hoa

0.54

Correlation Coefficient

Transimex Transportation  Phuoc Hoa

Very weak diversification

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

Pair Corralation between Transimex Transportation and Phuoc Hoa

Assuming the 90 days trading horizon Transimex Transportation is expected to generate 1.92 times less return on investment than Phuoc Hoa. In addition to that, Transimex Transportation is 1.33 times more volatile than Phuoc Hoa Rubber. It trades about 0.1 of its total potential returns per unit of risk. Phuoc Hoa Rubber is currently generating about 0.24 per unit of volatility. If you would invest  5,280,000  in Phuoc Hoa Rubber on December 30, 2024 and sell it today you would earn a total of  1,520,000  from holding Phuoc Hoa Rubber or generate 28.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.67%
Values	Daily Returns

Transimex Transportation JSC  vs.  Phuoc Hoa Rubber

Transimex Transportation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transimex Transportation JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Transimex Transportation displayed solid returns over the last few months and may actually be approaching a breakup point.

Phuoc Hoa Rubber

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Phuoc Hoa Rubber are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Phuoc Hoa displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transimex Transportation and Phuoc Hoa

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

The idea behind Transimex Transportation JSC and Phuoc Hoa Rubber 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.