Correlation Between Bao Ngoc and Transport

Can any of the company-specific risk be diversified away by investing in both Bao Ngoc and Transport 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 Transport 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 Transport and Industry, you can compare the effects of market volatilities on Bao Ngoc and Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bao Ngoc and Transport.

Diversification Opportunities for Bao Ngoc and Transport

0.3

Correlation Coefficient

Bao Ngoc  Transport

Weak diversification

The 3 months correlation between Bao and Transport is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bao Ngoc Investment and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of Bao Ngoc i.e., Bao Ngoc and Transport go up and down completely randomly.

Pair Corralation between Bao Ngoc and Transport

Assuming the 90 days trading horizon Bao Ngoc Investment is expected to generate 1.06 times more return on investment than Transport. However, Bao Ngoc is 1.06 times more volatile than Transport and Industry. It trades about -0.01 of its potential returns per unit of risk. Transport and Industry is currently generating about -0.2 per unit of risk. If you would invest  984,000  in Bao Ngoc Investment on September 15, 2024 and sell it today you would lose (24,000) from holding Bao Ngoc Investment or give up 2.44% of portfolio value over 90 days.

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

Bao Ngoc Investment  vs.  Transport and Industry

Bao Ngoc Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Transport and Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transport and Industry 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 fundamental 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.

Pair Trading with Bao Ngoc and Transport

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

The idea behind Bao Ngoc Investment and Transport and Industry 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.