Correlation Between Military Insurance and Truong Thanh

Can any of the company-specific risk be diversified away by investing in both Military Insurance and Truong Thanh 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 Military Insurance and Truong Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Military Insurance Corp and Truong Thanh Furniture, you can compare the effects of market volatilities on Military Insurance and Truong Thanh 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 Military Insurance with a short position of Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Military Insurance and Truong Thanh.

Diversification Opportunities for Military Insurance and Truong Thanh

-0.06

Correlation Coefficient

Military Insurance  Truong Thanh

Good diversification

The 3 months correlation between Military and Truong is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Military Insurance Corp and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture and Military Insurance 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 Military Insurance Corp are associated (or correlated) with Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of Military Insurance i.e., Military Insurance and Truong Thanh go up and down completely randomly.

Pair Corralation between Military Insurance and Truong Thanh

Assuming the 90 days trading horizon Military Insurance Corp is expected to generate 1.4 times more return on investment than Truong Thanh. However, Military Insurance is 1.4 times more volatile than Truong Thanh Furniture. It trades about -0.05 of its potential returns per unit of risk. Truong Thanh Furniture is currently generating about -0.08 per unit of risk. If you would invest  2,115,000  in Military Insurance Corp on September 29, 2024 and sell it today you would lose (365,000) from holding Military Insurance Corp or give up 17.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Military Insurance Corp  vs.  Truong Thanh Furniture

Military Insurance Corp

Risk-Adjusted Performance

4 of 100

Insignificant

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

Truong Thanh Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Military Insurance and Truong Thanh

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

The idea behind Military Insurance Corp and Truong Thanh Furniture 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.