Correlation Between Southern Rubber and Vietnam Dairy
Can any of the company-specific risk be diversified away by investing in both Southern Rubber and Vietnam Dairy 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 Vietnam Dairy 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 Vietnam Dairy Products, you can compare the effects of market volatilities on Southern Rubber and Vietnam Dairy 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 Vietnam Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Vietnam Dairy.
Diversification Opportunities for Southern Rubber and Vietnam Dairy
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Vietnam is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Vietnam Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Dairy Products 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 Vietnam Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Dairy Products has no effect on the direction of Southern Rubber i.e., Southern Rubber and Vietnam Dairy go up and down completely randomly.
Pair Corralation between Southern Rubber and Vietnam Dairy
Assuming the 90 days trading horizon Southern Rubber Industry is expected to generate 1.81 times more return on investment than Vietnam Dairy. However, Southern Rubber is 1.81 times more volatile than Vietnam Dairy Products. It trades about 0.01 of its potential returns per unit of risk. Vietnam Dairy Products is currently generating about -0.02 per unit of risk. If you would invest 1,374,270 in Southern Rubber Industry on November 5, 2024 and sell it today you would earn a total of 60,730 from holding Southern Rubber Industry or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
Southern Rubber Industry vs. Vietnam Dairy Products
Performance |
| Timeline |
| Southern Rubber Industry |
| Vietnam Dairy Products |
Southern Rubber and Vietnam Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Rubber and Vietnam Dairy
The main advantage of trading using opposite Southern Rubber and Vietnam Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber position performs unexpectedly, Vietnam Dairy 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 Vietnam Dairy will offset losses from the drop in Vietnam Dairy's long position.| Southern Rubber vs. Danang Education Investment | Southern Rubber vs. Tien Phong Plastic | Southern Rubber vs. Asia Pacific Investment | Southern Rubber vs. Post and Telecommunications |
| Vietnam Dairy vs. AgriBank Securities JSC | Vietnam Dairy vs. Construction And Investment | Vietnam Dairy vs. PV2 Investment JSC | Vietnam Dairy vs. HVC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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