Correlation Between Van Dien and Duc Thanh

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

By analyzing existing cross correlation between Van Dien Fused and Duc Thanh Wood, you can compare the effects of market volatilities on Van Dien and Duc 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 Van Dien with a short position of Duc Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van Dien and Duc Thanh.

Diversification Opportunities for Van Dien and Duc Thanh

0.41

Correlation Coefficient

Van Dien  Duc Thanh

Very weak diversification

The 3 months correlation between Van and Duc is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Van Dien Fused and Duc Thanh Wood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duc Thanh Wood and Van Dien 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 Van Dien Fused are associated (or correlated) with Duc Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duc Thanh Wood has no effect on the direction of Van Dien i.e., Van Dien and Duc Thanh go up and down completely randomly.

Pair Corralation between Van Dien and Duc Thanh

Assuming the 90 days trading horizon Van Dien Fused is expected to generate 2.63 times more return on investment than Duc Thanh. However, Van Dien is 2.63 times more volatile than Duc Thanh Wood. It trades about 0.06 of its potential returns per unit of risk. Duc Thanh Wood is currently generating about 0.02 per unit of risk. If you would invest  712,737  in Van Dien Fused on October 9, 2024 and sell it today you would earn a total of  637,263  from holding Van Dien Fused or generate 89.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.28%
Values	Daily Returns

Van Dien Fused  vs.  Duc Thanh Wood

Van Dien Fused

Risk-Adjusted Performance

0 of 100

Very Weak

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

Duc Thanh Wood

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Duc Thanh Wood are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Duc Thanh may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Van Dien and Duc Thanh

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

The idea behind Van Dien Fused and Duc Thanh Wood 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.