Correlation Between Van Dien and Long An

Can any of the company-specific risk be diversified away by investing in both Van Dien and Long An 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 Long An 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 Long An Food, you can compare the effects of market volatilities on Van Dien and Long An 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 Long An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van Dien and Long An.

Diversification Opportunities for Van Dien and Long An

-0.09

Correlation Coefficient

Van Dien  Long An

Good diversification

The 3 months correlation between Van and Long is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Van Dien Fused and Long An Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long An Food 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 Long An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long An Food has no effect on the direction of Van Dien i.e., Van Dien and Long An go up and down completely randomly.

Pair Corralation between Van Dien and Long An

Assuming the 90 days trading horizon Van Dien Fused is expected to generate 1.61 times more return on investment than Long An. However, Van Dien is 1.61 times more volatile than Long An Food. It trades about 0.06 of its potential returns per unit of risk. Long An Food is currently generating about 0.06 per unit of risk. If you would invest  810,286  in Van Dien Fused on October 27, 2024 and sell it today you would earn a total of  669,714  from holding Van Dien Fused or generate 82.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.59%
Values	Daily Returns

Van Dien Fused  vs.  Long An Food

Van Dien Fused

Risk-Adjusted Performance

0 of 100

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.

Long An Food

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Long An Food are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Long An displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Van Dien and Long An

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

The idea behind Van Dien Fused and Long An Food 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.