Correlation Between Tien Giang and Danh Khoi

Can any of the company-specific risk be diversified away by investing in both Tien Giang and Danh Khoi 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 Tien Giang and Danh Khoi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tien Giang Investment and Danh Khoi Group, you can compare the effects of market volatilities on Tien Giang and Danh Khoi 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 Tien Giang with a short position of Danh Khoi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tien Giang and Danh Khoi.

Diversification Opportunities for Tien Giang and Danh Khoi

0.47

Correlation Coefficient

Tien Giang  Danh Khoi

Very weak diversification

The 3 months correlation between Tien and Danh is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tien Giang Investment and Danh Khoi Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danh Khoi Group and Tien Giang 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 Tien Giang Investment are associated (or correlated) with Danh Khoi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danh Khoi Group has no effect on the direction of Tien Giang i.e., Tien Giang and Danh Khoi go up and down completely randomly.

Pair Corralation between Tien Giang and Danh Khoi

Assuming the 90 days trading horizon Tien Giang is expected to generate 4.64 times less return on investment than Danh Khoi. But when comparing it to its historical volatility, Tien Giang Investment is 4.17 times less risky than Danh Khoi. It trades about 0.2 of its potential returns per unit of risk. Danh Khoi Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  290,000  in Danh Khoi Group on September 29, 2024 and sell it today you would earn a total of  200,000  from holding Danh Khoi Group or generate 68.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Tien Giang Investment  vs.  Danh Khoi Group

Tien Giang Investment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tien Giang Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Tien Giang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Danh Khoi Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danh Khoi Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Danh Khoi displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tien Giang and Danh Khoi

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

The idea behind Tien Giang Investment and Danh Khoi Group 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.