Correlation Between TDT Investment and Binhthuan Agriculture

Can any of the company-specific risk be diversified away by investing in both TDT Investment and Binhthuan Agriculture 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 TDT Investment and Binhthuan Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TDT Investment and and Binhthuan Agriculture Services, you can compare the effects of market volatilities on TDT Investment and Binhthuan Agriculture 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 TDT Investment with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of TDT Investment and Binhthuan Agriculture.

Diversification Opportunities for TDT Investment and Binhthuan Agriculture

0.51

Correlation Coefficient

TDT Investment  Binhthuan Agriculture

Very weak diversification

The 3 months correlation between TDT and Binhthuan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding TDT Investment and and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and TDT 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 TDT Investment and are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of TDT Investment i.e., TDT Investment and Binhthuan Agriculture go up and down completely randomly.

Pair Corralation between TDT Investment and Binhthuan Agriculture

Assuming the 90 days trading horizon TDT Investment and is expected to under-perform the Binhthuan Agriculture. But the stock apears to be less risky and, when comparing its historical volatility, TDT Investment and is 2.74 times less risky than Binhthuan Agriculture. The stock trades about -0.03 of its potential returns per unit of risk. The Binhthuan Agriculture Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  425,000  in Binhthuan Agriculture Services on September 16, 2024 and sell it today you would earn a total of  45,000  from holding Binhthuan Agriculture Services or generate 10.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

TDT Investment and  vs.  Binhthuan Agriculture Services

TDT Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Binhthuan Agriculture

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Binhthuan Agriculture Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binhthuan Agriculture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TDT Investment and Binhthuan Agriculture

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

The idea behind TDT Investment and and Binhthuan Agriculture Services 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.