Correlation Between South Basic and Song Hong
Can any of the company-specific risk be diversified away by investing in both South Basic and Song Hong 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 Song Hong 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 Song Hong Garment, you can compare the effects of market volatilities on South Basic and Song Hong 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 Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and Song Hong.
Diversification Opportunities for South Basic and Song Hong
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between South and Song is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Song Hong Garment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Garment 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 Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Garment has no effect on the direction of South Basic i.e., South Basic and Song Hong go up and down completely randomly.
Pair Corralation between South Basic and Song Hong
Assuming the 90 days trading horizon South Basic Chemicals is expected to under-perform the Song Hong. In addition to that, South Basic is 1.64 times more volatile than Song Hong Garment. It trades about -0.02 of its total potential returns per unit of risk. Song Hong Garment is currently generating about 0.13 per unit of volatility. If you would invest 4,485,882 in Song Hong Garment on September 2, 2024 and sell it today you would earn a total of 434,118 from holding Song Hong Garment or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Basic Chemicals vs. Song Hong Garment
Performance |
| Timeline |
| South Basic Chemicals |
| Song Hong Garment |
South Basic and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Basic and Song Hong
The main advantage of trading using opposite South Basic and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.| South Basic vs. Vu Dang Investment | South Basic vs. Thanh Dat Investment | South Basic vs. DOMESCO Medical Import | South Basic vs. Tien Giang Investment |
| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong vs. Alphanam ME |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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