Correlation Between DIC Holdings and Binh Duong

Can any of the company-specific risk be diversified away by investing in both DIC Holdings and Binh Duong 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 DIC Holdings and Binh Duong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DIC Holdings Construction and Binh Duong Trade, you can compare the effects of market volatilities on DIC Holdings and Binh Duong 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 DIC Holdings with a short position of Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIC Holdings and Binh Duong.

Diversification Opportunities for DIC Holdings and Binh Duong

0.26

Correlation Coefficient

DIC Holdings  Binh Duong

Modest diversification

The 3 months correlation between DIC and Binh is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding DIC Holdings Construction and Binh Duong Trade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Trade and DIC Holdings 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 DIC Holdings Construction are associated (or correlated) with Binh Duong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Duong Trade has no effect on the direction of DIC Holdings i.e., DIC Holdings and Binh Duong go up and down completely randomly.

Pair Corralation between DIC Holdings and Binh Duong

Assuming the 90 days trading horizon DIC Holdings is expected to generate 1.09 times less return on investment than Binh Duong. In addition to that, DIC Holdings is 2.45 times more volatile than Binh Duong Trade. It trades about 0.13 of its total potential returns per unit of risk. Binh Duong Trade is currently generating about 0.35 per unit of volatility. If you would invest  995,000  in Binh Duong Trade on September 15, 2024 and sell it today you would earn a total of  125,000  from holding Binh Duong Trade or generate 12.56% return on investment over 90 days.

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

DIC Holdings Construction  vs.  Binh Duong Trade

DIC Holdings Construction

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIC Holdings Construction are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIC Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Binh Duong Trade

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Binh Duong Trade are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Binh Duong is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DIC Holdings and Binh Duong

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

The idea behind DIC Holdings Construction and Binh Duong Trade 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.