Correlation Between Da Nang and Saigon Thuong
Can any of the company-specific risk be diversified away by investing in both Da Nang 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 Da Nang and Saigon Thuong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Da Nang Construction and Saigon Thuong Tin, you can compare the effects of market volatilities on Da Nang 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 Da Nang with a short position of Saigon Thuong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Nang and Saigon Thuong.
Diversification Opportunities for Da Nang and Saigon Thuong
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DXV and Saigon is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Da Nang Construction 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 Da Nang 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 Da Nang Construction 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 Da Nang i.e., Da Nang and Saigon Thuong go up and down completely randomly.
Pair Corralation between Da Nang and Saigon Thuong
Assuming the 90 days trading horizon Da Nang Construction is expected to generate 2.04 times more return on investment than Saigon Thuong. However, Da Nang is 2.04 times more volatile than Saigon Thuong Tin. It trades about -0.01 of its potential returns per unit of risk. Saigon Thuong Tin is currently generating about -0.04 per unit of risk. If you would invest 450,000 in Da Nang Construction on September 14, 2024 and sell it today you would lose (78,000) from holding Da Nang Construction or give up 17.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Da Nang Construction vs. Saigon Thuong Tin
Performance |
| Timeline |
| Da Nang Construction |
| Saigon Thuong Tin |
Da Nang and Saigon Thuong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Da Nang and Saigon Thuong
The main advantage of trading using opposite Da Nang and Saigon Thuong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da Nang 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.The idea behind Da Nang Construction and Saigon Thuong Tin 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 Thuong vs. Song Hong Garment | Saigon Thuong vs. Alphanam ME | Saigon Thuong vs. Hochiminh City Metal | Saigon Thuong vs. Atesco Industrial Cartering |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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