Correlation Between MST Investment and Bao Ngoc
Can any of the company-specific risk be diversified away by investing in both MST Investment and Bao Ngoc 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 MST Investment and Bao Ngoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MST Investment JSC and Bao Ngoc Investment, you can compare the effects of market volatilities on MST Investment and Bao Ngoc 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 MST Investment with a short position of Bao Ngoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MST Investment and Bao Ngoc.
Diversification Opportunities for MST Investment and Bao Ngoc
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MST and Bao is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding MST Investment JSC and Bao Ngoc Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bao Ngoc Investment and MST Investment 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 MST Investment JSC are associated (or correlated) with Bao Ngoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bao Ngoc Investment has no effect on the direction of MST Investment i.e., MST Investment and Bao Ngoc go up and down completely randomly.
Pair Corralation between MST Investment and Bao Ngoc
Assuming the 90 days trading horizon MST Investment JSC is expected to generate 1.2 times more return on investment than Bao Ngoc. However, MST Investment is 1.2 times more volatile than Bao Ngoc Investment. It trades about 0.25 of its potential returns per unit of risk. Bao Ngoc Investment is currently generating about 0.21 per unit of risk. If you would invest 590,000 in MST Investment JSC on September 29, 2024 and sell it today you would earn a total of 100,000 from holding MST Investment JSC or generate 16.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
MST Investment JSC vs. Bao Ngoc Investment
Performance |
Timeline |
MST Investment JSC |
Bao Ngoc Investment |
MST Investment and Bao Ngoc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MST Investment and Bao Ngoc
The main advantage of trading using opposite MST Investment and Bao Ngoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MST Investment position performs unexpectedly, Bao Ngoc 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 Bao Ngoc will offset losses from the drop in Bao Ngoc's long position.MST Investment vs. FIT INVEST JSC | MST Investment vs. Damsan JSC | MST Investment vs. An Phat Plastic | MST Investment vs. Alphanam ME |
Bao Ngoc vs. FIT INVEST JSC | Bao Ngoc vs. Damsan JSC | Bao Ngoc vs. An Phat Plastic | Bao Ngoc vs. Alphanam ME |
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.
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