Correlation Between Vinhomes JSC and Binhthuan Agriculture

Can any of the company-specific risk be diversified away by investing in both Vinhomes JSC and Binhthuan Agriculture 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 Vinhomes JSC and Binhthuan Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vinhomes JSC and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Vinhomes JSC and Binhthuan Agriculture 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 Vinhomes JSC with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinhomes JSC and Binhthuan Agriculture.

Diversification Opportunities for Vinhomes JSC and Binhthuan Agriculture

-0.12

Correlation Coefficient

Vinhomes JSC  Binhthuan Agriculture

Good diversification

The 3 months correlation between Vinhomes and Binhthuan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vinhomes JSC and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Vinhomes JSC 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 Vinhomes JSC are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Vinhomes JSC i.e., Vinhomes JSC and Binhthuan Agriculture go up and down completely randomly.

Pair Corralation between Vinhomes JSC and Binhthuan Agriculture

Assuming the 90 days trading horizon Vinhomes JSC is expected to under-perform the Binhthuan Agriculture. But the stock apears to be less risky and, when comparing its historical volatility, Vinhomes JSC is 1.15 times less risky than Binhthuan Agriculture. The stock trades about -0.01 of its potential returns per unit of risk. The Binhthuan Agriculture Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  522,000  in Binhthuan Agriculture Services on September 20, 2024 and sell it today you would lose (15,000) from holding Binhthuan Agriculture Services or give up 2.87% of portfolio value over 90 days.

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

Vinhomes JSC  vs.  Binhthuan Agriculture Services

Vinhomes JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Binhthuan Agriculture

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binhthuan Agriculture Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binhthuan Agriculture displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vinhomes JSC and Binhthuan Agriculture

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

The idea behind Vinhomes JSC and Binhthuan Agriculture Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.