Correlation Between CMC Investment and Binh Duong

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

By analyzing existing cross correlation between CMC Investment JSC and Binh Duong Trade, you can compare the effects of market volatilities on CMC Investment and Binh Duong 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 CMC Investment with a short position of Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Investment and Binh Duong.

Diversification Opportunities for CMC Investment and Binh Duong

0.61

Correlation Coefficient

CMC Investment  Binh Duong

Poor diversification

The 3 months correlation between CMC and Binh is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment JSC and Binh Duong Trade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Trade and CMC 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 CMC Investment JSC are associated (or correlated) with Binh Duong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Duong Trade has no effect on the direction of CMC Investment i.e., CMC Investment and Binh Duong go up and down completely randomly.

Pair Corralation between CMC Investment and Binh Duong

Assuming the 90 days trading horizon CMC Investment JSC is expected to generate 2.68 times more return on investment than Binh Duong. However, CMC Investment is 2.68 times more volatile than Binh Duong Trade. It trades about 0.16 of its potential returns per unit of risk. Binh Duong Trade is currently generating about 0.21 per unit of risk. If you would invest  651,786  in CMC Investment JSC on May 12, 2025 and sell it today you would earn a total of  288,214  from holding CMC Investment JSC or generate 44.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.85%
Values	Daily Returns

CMC Investment JSC  vs.  Binh Duong Trade

CMC Investment JSC

Risk-Adjusted Performance

Good

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

Binh Duong Trade

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Binh Duong Trade are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Binh Duong displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CMC Investment and Binh Duong

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

The idea behind CMC Investment JSC and Binh Duong Trade 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.