Correlation Between Development Investment and Saigon Machinery
Can any of the company-specific risk be diversified away by investing in both Development Investment 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 Development Investment and Saigon Machinery 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 Saigon Machinery Spare, you can compare the effects of market volatilities on Development Investment 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 Development Investment with a short position of Saigon Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Development Investment and Saigon Machinery.
Diversification Opportunities for Development Investment and Saigon Machinery
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Development and Saigon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Development Investment Constru 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 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 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 Development Investment i.e., Development Investment and Saigon Machinery go up and down completely randomly.
Pair Corralation between Development Investment and Saigon Machinery
Assuming the 90 days trading horizon Development Investment Construction is expected to under-perform the Saigon Machinery. In addition to that, Development Investment is 2.95 times more volatile than Saigon Machinery Spare. It trades about -0.23 of its total potential returns per unit of risk. Saigon Machinery Spare is currently generating about 0.45 per unit of volatility. If you would invest 1,570,000 in Saigon Machinery Spare on November 7, 2024 and sell it today you would earn a total of 30,000 from holding Saigon Machinery Spare or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 33.33% |
| Values | Daily Returns |
Development Investment Constru vs. Saigon Machinery Spare
Performance |
| Timeline |
| Development Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Saigon Machinery Spare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Excellent
Development Investment and Saigon Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Development Investment and Saigon Machinery
The main advantage of trading using opposite Development Investment and Saigon Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Development Investment 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.The idea behind Development Investment Construction and Saigon Machinery Spare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Saigon Machinery vs. Transport and Industry | Saigon Machinery vs. Innovative Technology Development | Saigon Machinery vs. Vietnam JSCmmercial Bank | Saigon Machinery vs. Elcom Technology Communications |
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.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |