Correlation Between Southern Rubber and Vu Dang
Can any of the company-specific risk be diversified away by investing in both Southern Rubber and Vu Dang 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 Vu Dang 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 Vu Dang Investment, you can compare the effects of market volatilities on Southern Rubber and Vu Dang 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 Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Vu Dang.
Diversification Opportunities for Southern Rubber and Vu Dang
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and SVD is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment 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 Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of Southern Rubber i.e., Southern Rubber and Vu Dang go up and down completely randomly.
Pair Corralation between Southern Rubber and Vu Dang
Assuming the 90 days trading horizon Southern Rubber is expected to generate 2.0 times less return on investment than Vu Dang. But when comparing it to its historical volatility, Southern Rubber Industry is 1.15 times less risky than Vu Dang. It trades about 0.04 of its potential returns per unit of risk. Vu Dang Investment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 235,000 in Vu Dang Investment on September 4, 2024 and sell it today you would earn a total of 90,000 from holding Vu Dang Investment or generate 38.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Rubber Industry vs. Vu Dang Investment
Performance |
| Timeline |
| Southern Rubber Industry |
| Vu Dang Investment |
Southern Rubber and Vu Dang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Rubber and Vu Dang
The main advantage of trading using opposite Southern Rubber and Vu Dang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber position performs unexpectedly, Vu Dang 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 Vu Dang will offset losses from the drop in Vu Dang's long position.| Southern Rubber vs. BIDV Insurance Corp | Southern Rubber vs. VietinBank Securities JSC | Southern Rubber vs. Nam Kim Steel | Southern Rubber vs. Bich Chi Food |
| Vu Dang vs. Fecon Mining JSC | Vu Dang vs. An Phat Plastic | Vu Dang vs. Nafoods Group JSC | Vu Dang vs. Southern Rubber 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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