Correlation Between Hochiminh City and Nha Be

Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Nha Be 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 Hochiminh City and Nha Be into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hochiminh City Metal and Nha Be Water, you can compare the effects of market volatilities on Hochiminh City and Nha Be 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 Hochiminh City with a short position of Nha Be. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Nha Be.

Diversification Opportunities for Hochiminh City and Nha Be

-0.16

Correlation Coefficient

Hochiminh City  Nha Be

Good diversification

The 3 months correlation between Hochiminh and Nha is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Nha Be Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nha Be Water and Hochiminh City 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 Hochiminh City Metal are associated (or correlated) with Nha Be. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nha Be Water has no effect on the direction of Hochiminh City i.e., Hochiminh City and Nha Be go up and down completely randomly.

Pair Corralation between Hochiminh City and Nha Be

Assuming the 90 days trading horizon Hochiminh City is expected to generate 4.75 times less return on investment than Nha Be. But when comparing it to its historical volatility, Hochiminh City Metal is 5.92 times less risky than Nha Be. It trades about 0.23 of its potential returns per unit of risk. Nha Be Water is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,660,000  in Nha Be Water on September 29, 2024 and sell it today you would earn a total of  370,000  from holding Nha Be Water or generate 13.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.52%
Values	Daily Returns

Hochiminh City Metal  vs.  Nha Be Water

Hochiminh City Metal

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hochiminh City Metal are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Hochiminh City is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nha Be Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nha Be Water 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.

Pair Trading with Hochiminh City and Nha Be

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

The idea behind Hochiminh City Metal and Nha Be Water 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.