Correlation Between Bao Ngoc and Yen Bai

Can any of the company-specific risk be diversified away by investing in both Bao Ngoc and Yen Bai 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 Bao Ngoc and Yen Bai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bao Ngoc Investment and Yen Bai Forest, you can compare the effects of market volatilities on Bao Ngoc and Yen Bai 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 Bao Ngoc with a short position of Yen Bai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bao Ngoc and Yen Bai.

Diversification Opportunities for Bao Ngoc and Yen Bai

-0.31

Correlation Coefficient

Bao Ngoc  Yen Bai

Very good diversification

The 3 months correlation between Bao and Yen is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bao Ngoc Investment and Yen Bai Forest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yen Bai Forest and Bao Ngoc 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 Bao Ngoc Investment are associated (or correlated) with Yen Bai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yen Bai Forest has no effect on the direction of Bao Ngoc i.e., Bao Ngoc and Yen Bai go up and down completely randomly.

Pair Corralation between Bao Ngoc and Yen Bai

Assuming the 90 days trading horizon Bao Ngoc Investment is expected to generate 1.49 times more return on investment than Yen Bai. However, Bao Ngoc is 1.49 times more volatile than Yen Bai Forest. It trades about 0.11 of its potential returns per unit of risk. Yen Bai Forest is currently generating about -0.07 per unit of risk. If you would invest  936,000  in Bao Ngoc Investment on September 29, 2024 and sell it today you would earn a total of  154,000  from holding Bao Ngoc Investment or generate 16.45% return on investment over 90 days.

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

Bao Ngoc Investment  vs.  Yen Bai Forest

Bao Ngoc Investment

Risk-Adjusted Performance

8 of 100

OK

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

Yen Bai Forest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yen Bai Forest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bao Ngoc and Yen Bai

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

The idea behind Bao Ngoc Investment and Yen Bai Forest 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.