Correlation Between Dong Nai and Saigon Thuong
Can any of the company-specific risk be diversified away by investing in both Dong Nai and Saigon Thuong 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 Dong Nai and Saigon Thuong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong Nai Plastic and Saigon Thuong Tin, you can compare the effects of market volatilities on Dong Nai and Saigon Thuong 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 Dong Nai with a short position of Saigon Thuong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong Nai and Saigon Thuong.
Diversification Opportunities for Dong Nai and Saigon Thuong
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dong and Saigon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dong Nai Plastic and Saigon Thuong Tin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Thuong Tin and Dong Nai 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 Dong Nai Plastic are associated (or correlated) with Saigon Thuong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Thuong Tin has no effect on the direction of Dong Nai i.e., Dong Nai and Saigon Thuong go up and down completely randomly.
Pair Corralation between Dong Nai and Saigon Thuong
Assuming the 90 days trading horizon Dong Nai Plastic is expected to under-perform the Saigon Thuong. In addition to that, Dong Nai is 2.43 times more volatile than Saigon Thuong Tin. It trades about -0.06 of its total potential returns per unit of risk. Saigon Thuong Tin is currently generating about 0.08 per unit of volatility. If you would invest 541,000 in Saigon Thuong Tin on September 12, 2024 and sell it today you would earn a total of 46,000 from holding Saigon Thuong Tin or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 70.77% |
| Values | Daily Returns |
Dong Nai Plastic vs. Saigon Thuong Tin
Performance |
| Timeline |
| Dong Nai Plastic |
| Saigon Thuong Tin |
Dong Nai and Saigon Thuong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong Nai and Saigon Thuong
The main advantage of trading using opposite Dong Nai and Saigon Thuong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong Nai position performs unexpectedly, Saigon Thuong 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 Thuong will offset losses from the drop in Saigon Thuong's long position.| Dong Nai vs. Construction JSC No5 | Dong Nai vs. Global Electrical Technology | Dong Nai vs. SCG Construction JSC | Dong Nai vs. Mechanics Construction and |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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