Correlation Between Southern Rubber and Van Phat
Can any of the company-specific risk be diversified away by investing in both Southern Rubber and Van Phat 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 Van Phat 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 Van Phat Hung, you can compare the effects of market volatilities on Southern Rubber and Van Phat 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 Van Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Van Phat.
Diversification Opportunities for Southern Rubber and Van Phat
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Van is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Van Phat Hung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Phat Hung 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 Van Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Phat Hung has no effect on the direction of Southern Rubber i.e., Southern Rubber and Van Phat go up and down completely randomly.
Pair Corralation between Southern Rubber and Van Phat
Assuming the 90 days trading horizon Southern Rubber Industry is expected to generate 1.58 times more return on investment than Van Phat. However, Southern Rubber is 1.58 times more volatile than Van Phat Hung. It trades about 0.31 of its potential returns per unit of risk. Van Phat Hung is currently generating about -0.17 per unit of risk. If you would invest 1,115,000 in Southern Rubber Industry on September 2, 2024 and sell it today you would earn a total of 250,000 from holding Southern Rubber Industry or generate 22.42% 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. Van Phat Hung
Performance |
| Timeline |
| Southern Rubber Industry |
| Van Phat Hung |
Southern Rubber and Van Phat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Rubber and Van Phat
The main advantage of trading using opposite Southern Rubber and Van Phat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber position performs unexpectedly, Van Phat 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 Van Phat will offset losses from the drop in Van Phat's long position.| Southern Rubber vs. FIT INVEST JSC | Southern Rubber vs. Damsan JSC | Southern Rubber vs. An Phat Plastic | Southern Rubber vs. Alphanam ME |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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