Correlation Between Danang Education and Saigon Machinery
Can any of the company-specific risk be diversified away by investing in both Danang Education and Saigon Machinery 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 Danang Education and Saigon Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danang Education Investment and Saigon Machinery Spare, you can compare the effects of market volatilities on Danang Education and Saigon Machinery 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 Danang Education with a short position of Saigon Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Education and Saigon Machinery.
Diversification Opportunities for Danang Education and Saigon Machinery
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Danang and Saigon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Danang Education Investment and Saigon Machinery Spare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Machinery Spare and Danang Education 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 Danang Education Investment are associated (or correlated) with Saigon Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Machinery Spare has no effect on the direction of Danang Education i.e., Danang Education and Saigon Machinery go up and down completely randomly.
Pair Corralation between Danang Education and Saigon Machinery
Assuming the 90 days trading horizon Danang Education is expected to generate 2.03 times less return on investment than Saigon Machinery. But when comparing it to its historical volatility, Danang Education Investment is 1.02 times less risky than Saigon Machinery. It trades about 0.04 of its potential returns per unit of risk. Saigon Machinery Spare is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 739,967 in Saigon Machinery Spare on October 16, 2024 and sell it today you would earn a total of 860,033 from holding Saigon Machinery Spare or generate 116.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.02% |
| Values | Daily Returns |
Danang Education Investment vs. Saigon Machinery Spare
Performance |
| Timeline |
| Danang Education Inv |
| Saigon Machinery Spare |
Danang Education and Saigon Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danang Education and Saigon Machinery
The main advantage of trading using opposite Danang Education and Saigon Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danang Education position performs unexpectedly, Saigon Machinery 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 Saigon Machinery will offset losses from the drop in Saigon Machinery's long position.| Danang Education vs. Century Synthetic Fiber | Danang Education vs. Binh Duong Construction | Danang Education vs. Techno Agricultural Supplying | Danang Education vs. BIDV Insurance Corp |
| Saigon Machinery vs. Tien Giang Investment | Saigon Machinery vs. VTC Telecommunications JSC | Saigon Machinery vs. MST Investment JSC | Saigon Machinery vs. Din Capital 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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