Correlation Between Southern Rubber and DIC Holdings
Can any of the company-specific risk be diversified away by investing in both Southern Rubber and DIC Holdings 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 Southern Rubber and DIC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Rubber Industry and DIC Holdings Construction, you can compare the effects of market volatilities on Southern Rubber and DIC Holdings 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 Southern Rubber with a short position of DIC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and DIC Holdings.
Diversification Opportunities for Southern Rubber and DIC Holdings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and DIC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction and Southern Rubber 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 Southern Rubber Industry are associated (or correlated) with DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of Southern Rubber i.e., Southern Rubber and DIC Holdings go up and down completely randomly.
Pair Corralation between Southern Rubber and DIC Holdings
Assuming the 90 days trading horizon Southern Rubber Industry is expected to generate 0.85 times more return on investment than DIC Holdings. However, Southern Rubber Industry is 1.17 times less risky than DIC Holdings. It trades about 0.13 of its potential returns per unit of risk. DIC Holdings Construction is currently generating about -0.07 per unit of risk. If you would invest 1,290,000 in Southern Rubber Industry on October 26, 2024 and sell it today you would earn a total of 175,000 from holding Southern Rubber Industry or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Rubber Industry vs. DIC Holdings Construction
Performance |
| Timeline |
| Southern Rubber Industry |
| DIC Holdings Construction |
Southern Rubber and DIC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Rubber and DIC Holdings
The main advantage of trading using opposite Southern Rubber and DIC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber position performs unexpectedly, DIC Holdings 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 DIC Holdings will offset losses from the drop in DIC Holdings' long position.| Southern Rubber vs. FIT INVEST JSC | Southern Rubber vs. Damsan JSC | Southern Rubber vs. An Phat Plastic | Southern Rubber vs. APG Securities Joint |
| DIC Holdings vs. Long An Food | DIC Holdings vs. Sao Ta Foods | DIC Holdings vs. Tri Viet Management | DIC Holdings vs. Transport and Industry |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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