Correlation Between Binhthuan Agriculture and AgriBank Securities

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

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

Diversification Opportunities for Binhthuan Agriculture and AgriBank Securities

0.35

Correlation Coefficient

Binhthuan Agriculture  AgriBank Securities

Weak diversification

The 3 months correlation between Binhthuan and AgriBank is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and AgriBank Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgriBank Securities JSC and Binhthuan Agriculture 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 Binhthuan Agriculture Services are associated (or correlated) with AgriBank Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgriBank Securities JSC has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and AgriBank Securities go up and down completely randomly.

Pair Corralation between Binhthuan Agriculture and AgriBank Securities

Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to generate 1.15 times more return on investment than AgriBank Securities. However, Binhthuan Agriculture is 1.15 times more volatile than AgriBank Securities JSC. It trades about 0.08 of its potential returns per unit of risk. AgriBank Securities JSC is currently generating about -0.02 per unit of risk. If you would invest  425,000  in Binhthuan Agriculture Services on September 15, 2024 and sell it today you would earn a total of  45,000  from holding Binhthuan Agriculture Services or generate 10.59% return on investment over 90 days.

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

Binhthuan Agriculture Services  vs.  AgriBank Securities JSC

Binhthuan Agriculture

Risk-Adjusted Performance

6 of 100

Modest

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

AgriBank Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Binhthuan Agriculture and AgriBank Securities

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

The idea behind Binhthuan Agriculture Services and AgriBank Securities 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 Transaction History module to view history of all your transactions and understand their impact on performance.