Correlation Between Mobile World and Quang Nam

Can any of the company-specific risk be diversified away by investing in both Mobile World and Quang Nam 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 Mobile World and Quang Nam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mobile World Investment and Quang Nam Transportation, you can compare the effects of market volatilities on Mobile World and Quang Nam 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 Mobile World with a short position of Quang Nam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobile World and Quang Nam.

Diversification Opportunities for Mobile World and Quang Nam

-0.7

Correlation Coefficient

Mobile World  Quang Nam

Excellent diversification

The 3 months correlation between Mobile and Quang is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mobile World Investment and Quang Nam Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quang Nam Transportation and Mobile World 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 Mobile World Investment are associated (or correlated) with Quang Nam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quang Nam Transportation has no effect on the direction of Mobile World i.e., Mobile World and Quang Nam go up and down completely randomly.

Pair Corralation between Mobile World and Quang Nam

Assuming the 90 days trading horizon Mobile World Investment is expected to under-perform the Quang Nam. But the stock apears to be less risky and, when comparing its historical volatility, Mobile World Investment is 3.01 times less risky than Quang Nam. The stock trades about -0.04 of its potential returns per unit of risk. The Quang Nam Transportation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,302,968  in Quang Nam Transportation on September 5, 2024 and sell it today you would earn a total of  217,032  from holding Quang Nam Transportation or generate 16.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	36.92%
Values	Daily Returns

Mobile World Investment  vs.  Quang Nam Transportation

Mobile World Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Quang Nam Transportation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quang Nam Transportation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Quang Nam displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobile World and Quang Nam

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

The idea behind Mobile World Investment and Quang Nam Transportation 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.