Correlation Between South Basic and Truong Thanh
Can any of the company-specific risk be diversified away by investing in both South Basic and Truong Thanh 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 Truong Thanh 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 Truong Thanh Furniture, you can compare the effects of market volatilities on South Basic and Truong Thanh 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 Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and Truong Thanh.
Diversification Opportunities for South Basic and Truong Thanh
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between South and Truong is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture 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 Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of South Basic i.e., South Basic and Truong Thanh go up and down completely randomly.
Pair Corralation between South Basic and Truong Thanh
Assuming the 90 days trading horizon South Basic Chemicals is expected to generate 1.23 times more return on investment than Truong Thanh. However, South Basic is 1.23 times more volatile than Truong Thanh Furniture. It trades about 0.08 of its potential returns per unit of risk. Truong Thanh Furniture is currently generating about 0.05 per unit of risk. If you would invest 3,585,000 in South Basic Chemicals on September 3, 2024 and sell it today you would earn a total of 135,000 from holding South Basic Chemicals or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Basic Chemicals vs. Truong Thanh Furniture
Performance |
| Timeline |
| South Basic Chemicals |
| Truong Thanh Furniture |
South Basic and Truong Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Basic and Truong Thanh
The main advantage of trading using opposite South Basic and Truong Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, Truong Thanh 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 Truong Thanh will offset losses from the drop in Truong Thanh's long position.| South Basic vs. Vincom Retail JSC | South Basic vs. Vietnam Dairy Products | South Basic vs. Post and Telecommunications | South Basic vs. POST TELECOMMU |
| Truong Thanh vs. South Basic Chemicals | Truong Thanh vs. PetroVietnam Drilling Well | Truong Thanh vs. LDG Investment JSC | Truong Thanh vs. TDG Global Investment |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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