Correlation Between Bich Chi and VNECO 3

Can any of the company-specific risk be diversified away by investing in both Bich Chi and VNECO 3 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 Bich Chi and VNECO 3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bich Chi Food and VNECO 3, you can compare the effects of market volatilities on Bich Chi and VNECO 3 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 Bich Chi with a short position of VNECO 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bich Chi and VNECO 3.

Diversification Opportunities for Bich Chi and VNECO 3

-0.37

Correlation Coefficient

Bich Chi  VNECO 3

Very good diversification

The 3 months correlation between Bich and VNECO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bich Chi Food and VNECO 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VNECO 3 and Bich Chi 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 Bich Chi Food are associated (or correlated) with VNECO 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VNECO 3 has no effect on the direction of Bich Chi i.e., Bich Chi and VNECO 3 go up and down completely randomly.

Pair Corralation between Bich Chi and VNECO 3

If you would invest  3,640,000  in Bich Chi Food on September 29, 2024 and sell it today you would earn a total of  510,000  from holding Bich Chi Food or generate 14.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bich Chi Food  vs.  VNECO 3

Bich Chi Food

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bich Chi 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, Bich Chi displayed solid returns over the last few months and may actually be approaching a breakup point.

VNECO 3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VNECO 3 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VNECO 3 is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bich Chi and VNECO 3

The main advantage of trading using opposite Bich Chi and VNECO 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bich Chi position performs unexpectedly, VNECO 3 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 VNECO 3 will offset losses from the drop in VNECO 3's long position.

The idea behind Bich Chi Food and VNECO 3 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.