Correlation Between Tri Viet and Binh Thanh

Can any of the company-specific risk be diversified away by investing in both Tri Viet and Binh 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 Tri Viet and Binh Thanh 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 Binh Thanh Import, you can compare the effects of market volatilities on Tri Viet and Binh 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 Tri Viet with a short position of Binh Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Viet and Binh Thanh.

Diversification Opportunities for Tri Viet and Binh Thanh

-0.47

Correlation Coefficient

Tri Viet  Binh Thanh

Very good diversification

The 3 months correlation between Tri and Binh is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tri Viet Management and Binh Thanh Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Thanh Import 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 Binh Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Thanh Import has no effect on the direction of Tri Viet i.e., Tri Viet and Binh Thanh go up and down completely randomly.

Pair Corralation between Tri Viet and Binh Thanh

Assuming the 90 days trading horizon Tri Viet is expected to generate 2.51 times less return on investment than Binh Thanh. But when comparing it to its historical volatility, Tri Viet Management is 1.41 times less risky than Binh Thanh. It trades about 0.1 of its potential returns per unit of risk. Binh Thanh Import is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,105,000  in Binh Thanh Import on September 22, 2024 and sell it today you would earn a total of  165,000  from holding Binh Thanh Import or generate 7.84% return on investment over 90 days.

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

Tri Viet Management  vs.  Binh Thanh Import

Tri Viet Management

Risk-Adjusted Performance

2 of 100

Weak

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

Binh Thanh Import

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Binh Thanh Import 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 essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tri Viet and Binh Thanh

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

The idea behind Tri Viet Management and Binh Thanh Import 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.