Correlation Between An Phat and Song Hong
Can any of the company-specific risk be diversified away by investing in both An Phat and Song Hong 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 An Phat and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between An Phat Plastic and Song Hong Aluminum, you can compare the effects of market volatilities on An Phat and Song Hong 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 An Phat with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of An Phat and Song Hong.
Diversification Opportunities for An Phat and Song Hong
Poor diversification
The 3 months correlation between AAA and Song is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding An Phat Plastic and Song Hong Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Aluminum and An Phat 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 An Phat Plastic are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Aluminum has no effect on the direction of An Phat i.e., An Phat and Song Hong go up and down completely randomly.
Pair Corralation between An Phat and Song Hong
Assuming the 90 days trading horizon An Phat Plastic is expected to under-perform the Song Hong. But the stock apears to be less risky and, when comparing its historical volatility, An Phat Plastic is 2.07 times less risky than Song Hong. The stock trades about -0.2 of its potential returns per unit of risk. The Song Hong Aluminum is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 530,000 in Song Hong Aluminum on August 28, 2024 and sell it today you would lose (70,000) from holding Song Hong Aluminum or give up 13.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
An Phat Plastic vs. Song Hong Aluminum
Performance |
| Timeline |
| An Phat Plastic |
| Song Hong Aluminum |
An Phat and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with An Phat and Song Hong
The main advantage of trading using opposite An Phat and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if An Phat position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.| An Phat vs. FIT INVEST JSC | An Phat vs. Damsan JSC | An Phat vs. APG Securities Joint | An Phat vs. Binhthuan Agriculture Services |
| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong vs. APG Securities Joint |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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