Correlation Between Tay Ninh and Hanoi Plastics

Can any of the company-specific risk be diversified away by investing in both Tay Ninh and Hanoi Plastics 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 Tay Ninh and Hanoi Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tay Ninh and Hanoi Plastics

-0.83

Correlation Coefficient

Tay Ninh  Hanoi Plastics

Pay attention - limited upside

The 3 months correlation between Tay and Hanoi is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tay Ninh Rubber and Hanoi Plastics JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Plastics JSC and Tay Ninh 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 Tay Ninh Rubber are associated (or correlated) with Hanoi Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Plastics JSC has no effect on the direction of Tay Ninh i.e., Tay Ninh and Hanoi Plastics go up and down completely randomly.

Pair Corralation between Tay Ninh and Hanoi Plastics

Assuming the 90 days trading horizon Tay Ninh Rubber is expected to generate 2.19 times more return on investment than Hanoi Plastics. However, Tay Ninh is 2.19 times more volatile than Hanoi Plastics JSC. It trades about 0.21 of its potential returns per unit of risk. Hanoi Plastics JSC is currently generating about -0.12 per unit of risk. If you would invest  3,930,000  in Tay Ninh Rubber on October 7, 2024 and sell it today you would earn a total of  1,340,000  from holding Tay Ninh Rubber or generate 34.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tay Ninh Rubber  vs.  Hanoi Plastics JSC

Tay Ninh Rubber

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tay Ninh Rubber are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tay Ninh displayed solid returns over the last few months and may actually be approaching a breakup point.

Hanoi Plastics JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tay Ninh and Hanoi Plastics

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

The idea behind Tay Ninh Rubber and Hanoi Plastics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.