Correlation Between Tri Viet and Mekong Fisheries

Can any of the company-specific risk be diversified away by investing in both Tri Viet and Mekong Fisheries 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 Tri Viet and Mekong Fisheries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tri Viet Management and Mekong Fisheries JSC, you can compare the effects of market volatilities on Tri Viet and Mekong Fisheries 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 Tri Viet with a short position of Mekong Fisheries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Viet and Mekong Fisheries.

Diversification Opportunities for Tri Viet and Mekong Fisheries

0.04

Correlation Coefficient

Tri Viet  Mekong Fisheries

Significant diversification

The 3 months correlation between Tri and Mekong is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tri Viet Management and Mekong Fisheries JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekong Fisheries JSC and Tri Viet 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 Tri Viet Management are associated (or correlated) with Mekong Fisheries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekong Fisheries JSC has no effect on the direction of Tri Viet i.e., Tri Viet and Mekong Fisheries go up and down completely randomly.

Pair Corralation between Tri Viet and Mekong Fisheries

Assuming the 90 days trading horizon Tri Viet Management is expected to under-perform the Mekong Fisheries. But the stock apears to be less risky and, when comparing its historical volatility, Tri Viet Management is 1.48 times less risky than Mekong Fisheries. The stock trades about -0.11 of its potential returns per unit of risk. The Mekong Fisheries JSC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  730,000  in Mekong Fisheries JSC on December 19, 2024 and sell it today you would lose (27,000) from holding Mekong Fisheries JSC or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.55%
Values	Daily Returns

Tri Viet Management  vs.  Mekong Fisheries JSC

Tri Viet Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tri Viet Management 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.

Mekong Fisheries JSC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tri Viet and Mekong Fisheries

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

The idea behind Tri Viet Management and Mekong Fisheries 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.