Correlation Between Riverway Management and Song Hong
Can any of the company-specific risk be diversified away by investing in both Riverway Management 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 Riverway Management and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Riverway Management JSC and Song Hong Aluminum, you can compare the effects of market volatilities on Riverway Management 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 Riverway Management with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riverway Management and Song Hong.
Diversification Opportunities for Riverway Management and Song Hong
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Riverway and Song is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Riverway Management JSC and Song Hong Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Aluminum and Riverway Management 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 Riverway Management JSC 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 Aluminum has no effect on the direction of Riverway Management i.e., Riverway Management and Song Hong go up and down completely randomly.
Pair Corralation between Riverway Management and Song Hong
Assuming the 90 days trading horizon Riverway Management JSC is expected to under-perform the Song Hong. In addition to that, Riverway Management is 1.03 times more volatile than Song Hong Aluminum. It trades about -0.21 of its total potential returns per unit of risk. Song Hong Aluminum is currently generating about -0.1 per unit of volatility. If you would invest 480,000 in Song Hong Aluminum on September 2, 2024 and sell it today you would lose (30,000) from holding Song Hong Aluminum or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.48% |
| Values | Daily Returns |
Riverway Management JSC vs. Song Hong Aluminum
Performance |
| Timeline |
| Riverway Management JSC |
| Song Hong Aluminum |
Riverway Management and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Riverway Management and Song Hong
The main advantage of trading using opposite Riverway Management and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riverway Management 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.| Riverway Management vs. Southern Rubber Industry | Riverway Management vs. Vietnam Rubber Group | Riverway Management vs. Phuoc Hoa Rubber | Riverway Management vs. Viet Thanh Plastic |
| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong vs. Alphanam ME |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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