Correlation Between Damsan JSC and Song Hong
Can any of the company-specific risk be diversified away by investing in both Damsan JSC 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 Damsan JSC and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Damsan JSC and Song Hong Garment, you can compare the effects of market volatilities on Damsan JSC 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 Damsan JSC with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and Song Hong.
Diversification Opportunities for Damsan JSC and Song Hong
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Damsan and Song is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and Song Hong Garment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Garment and Damsan JSC 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 Damsan JSC 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 Garment has no effect on the direction of Damsan JSC i.e., Damsan JSC and Song Hong go up and down completely randomly.
Pair Corralation between Damsan JSC and Song Hong
Assuming the 90 days trading horizon Damsan JSC is expected to generate 4.15 times less return on investment than Song Hong. In addition to that, Damsan JSC is 1.21 times more volatile than Song Hong Garment. It trades about 0.01 of its total potential returns per unit of risk. Song Hong Garment is currently generating about 0.06 per unit of volatility. If you would invest 3,153,090 in Song Hong Garment on August 27, 2024 and sell it today you would earn a total of 2,136,910 from holding Song Hong Garment or generate 67.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Damsan JSC vs. Song Hong Garment
Performance |
| Timeline |
| Damsan JSC |
| Song Hong Garment |
Damsan JSC and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Damsan JSC and Song Hong
The main advantage of trading using opposite Damsan JSC and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Damsan JSC 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.| Damsan JSC vs. FIT INVEST JSC | Damsan JSC vs. An Phat Plastic | Damsan JSC vs. APG Securities Joint | Damsan JSC vs. Binhthuan Agriculture Services |
| Song Hong vs. TDG Global Investment | Song Hong vs. Nafoods Group JSC | Song Hong vs. Asia Pacific Investment | Song Hong vs. TDT Investment and |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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