Correlation Between Techno Agricultural and Truong Thanh

Can any of the company-specific risk be diversified away by investing in both Techno Agricultural and Truong Thanh 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 Techno Agricultural and Truong Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Techno Agricultural Supplying and Truong Thanh Furniture, you can compare the effects of market volatilities on Techno Agricultural and Truong Thanh 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 Techno Agricultural with a short position of Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techno Agricultural and Truong Thanh.

Diversification Opportunities for Techno Agricultural and Truong Thanh

-0.13

Correlation Coefficient

Techno Agricultural  Truong Thanh

Good diversification

The 3 months correlation between Techno and Truong is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Techno Agricultural Supplying and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture and Techno Agricultural 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 Techno Agricultural Supplying are associated (or correlated) with Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of Techno Agricultural i.e., Techno Agricultural and Truong Thanh go up and down completely randomly.

Pair Corralation between Techno Agricultural and Truong Thanh

Assuming the 90 days trading horizon Techno Agricultural Supplying is expected to under-perform the Truong Thanh. In addition to that, Techno Agricultural is 1.03 times more volatile than Truong Thanh Furniture. It trades about -0.1 of its total potential returns per unit of risk. Truong Thanh Furniture is currently generating about -0.08 per unit of volatility. If you would invest  443,000  in Truong Thanh Furniture on October 9, 2024 and sell it today you would lose (124,000) from holding Truong Thanh Furniture or give up 27.99% of portfolio value over 90 days.

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

Techno Agricultural Supplying  vs.  Truong Thanh Furniture

Techno Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techno Agricultural Supplying has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Truong Thanh Furniture

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Truong Thanh Furniture are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Truong Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Techno Agricultural and Truong Thanh

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

The idea behind Techno Agricultural Supplying and Truong Thanh Furniture 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.