Correlation Between Damsan JSC and Danh Khoi

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

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

Diversification Opportunities for Damsan JSC and Danh Khoi

-0.85

Correlation Coefficient

Damsan JSC  Danh Khoi

Pay attention - limited upside

The 3 months correlation between Damsan and Danh is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and Danh Khoi Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danh Khoi Group and Damsan 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 Damsan JSC are associated (or correlated) with Danh Khoi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danh Khoi Group has no effect on the direction of Damsan JSC i.e., Damsan JSC and Danh Khoi go up and down completely randomly.

Pair Corralation between Damsan JSC and Danh Khoi

Assuming the 90 days trading horizon Damsan JSC is expected to under-perform the Danh Khoi. But the stock apears to be less risky and, when comparing its historical volatility, Damsan JSC is 2.23 times less risky than Danh Khoi. The stock trades about -0.13 of its potential returns per unit of risk. The Danh Khoi Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  290,000  in Danh Khoi Group on September 29, 2024 and sell it today you would earn a total of  200,000  from holding Danh Khoi Group or generate 68.97% return on investment over 90 days.

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

Damsan JSC  vs.  Danh Khoi Group

Damsan JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damsan JSC 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 basic 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.

Danh Khoi Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danh Khoi Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Danh Khoi displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Damsan JSC and Danh Khoi

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

The idea behind Damsan JSC and Danh Khoi Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .