Correlation Between South Basic and Fecon Mining
Can any of the company-specific risk be diversified away by investing in both South Basic and Fecon Mining 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 South Basic and Fecon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Basic Chemicals and Fecon Mining JSC, you can compare the effects of market volatilities on South Basic and Fecon Mining 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 South Basic with a short position of Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and Fecon Mining.
Diversification Opportunities for South Basic and Fecon Mining
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between South and Fecon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC and South Basic 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 South Basic Chemicals are associated (or correlated) with Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of South Basic i.e., South Basic and Fecon Mining go up and down completely randomly.
Pair Corralation between South Basic and Fecon Mining
Assuming the 90 days trading horizon South Basic Chemicals is expected to under-perform the Fecon Mining. In addition to that, South Basic is 2.55 times more volatile than Fecon Mining JSC. It trades about -0.04 of its total potential returns per unit of risk. Fecon Mining JSC is currently generating about -0.01 per unit of volatility. If you would invest 391,220 in Fecon Mining JSC on October 18, 2024 and sell it today you would lose (69,220) from holding Fecon Mining JSC or give up 17.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Basic Chemicals vs. Fecon Mining JSC
Performance |
| Timeline |
| South Basic Chemicals |
| Fecon Mining JSC |
South Basic and Fecon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Basic and Fecon Mining
The main advantage of trading using opposite South Basic and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, Fecon Mining 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 Fecon Mining will offset losses from the drop in Fecon Mining's long position.| South Basic vs. Hai An Transport | South Basic vs. Hochiminh City Metal | South Basic vs. Binh Duong Trade | South Basic vs. Pacific Petroleum Transportation |
| Fecon Mining vs. IDJ FINANCIAL | Fecon Mining vs. South Basic Chemicals | Fecon Mining vs. VietinBank Securities JSC | Fecon Mining vs. Nafoods Group JSC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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