Correlation Between Development Investment and Song Hong
Can any of the company-specific risk be diversified away by investing in both Development Investment 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 Development Investment and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Development Investment Construction and Song Hong Garment, you can compare the effects of market volatilities on Development Investment 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 Development Investment with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Development Investment and Song Hong.
Diversification Opportunities for Development Investment and Song Hong
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Development and Song is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Development Investment Constru 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 Development Investment 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 Development Investment Construction 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 Development Investment i.e., Development Investment and Song Hong go up and down completely randomly.
Pair Corralation between Development Investment and Song Hong
Assuming the 90 days trading horizon Development Investment is expected to generate 1.3 times less return on investment than Song Hong. But when comparing it to its historical volatility, Development Investment Construction is 1.02 times less risky than Song Hong. It trades about 0.05 of its potential returns per unit of risk. Song Hong Garment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,150,000 in Song Hong Garment on September 14, 2024 and sell it today you would earn a total of 120,000 from holding Song Hong Garment or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.27% |
| Values | Daily Returns |
Development Investment Constru vs. Song Hong Garment
Performance |
| Timeline |
| Development Investment |
| Song Hong Garment |
Development Investment and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Development Investment and Song Hong
The main advantage of trading using opposite Development Investment and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Development Investment 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.| Development Investment vs. FIT INVEST JSC | Development Investment vs. Damsan JSC | Development Investment vs. An Phat Plastic | Development Investment vs. Alphanam ME |
| Song Hong vs. Development Investment Construction | Song Hong vs. Elcom Technology Communications | Song Hong vs. Vina2 Investment and | Song Hong vs. LDG Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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