Correlation Between Sao Ta and Asia Commercial
Can any of the company-specific risk be diversified away by investing in both Sao Ta and Asia Commercial 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 Sao Ta and Asia Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sao Ta Foods and Asia Commercial Bank, you can compare the effects of market volatilities on Sao Ta and Asia Commercial 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 Sao Ta with a short position of Asia Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Asia Commercial.
Diversification Opportunities for Sao Ta and Asia Commercial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sao and Asia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Asia Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Commercial Bank and Sao Ta 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 Sao Ta Foods are associated (or correlated) with Asia Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Commercial Bank has no effect on the direction of Sao Ta i.e., Sao Ta and Asia Commercial go up and down completely randomly.
Pair Corralation between Sao Ta and Asia Commercial
Assuming the 90 days trading horizon Sao Ta Foods is expected to generate 1.5 times more return on investment than Asia Commercial. However, Sao Ta is 1.5 times more volatile than Asia Commercial Bank. It trades about 0.31 of its potential returns per unit of risk. Asia Commercial Bank is currently generating about 0.07 per unit of risk. If you would invest 4,550,000 in Sao Ta Foods on September 5, 2024 and sell it today you would earn a total of 330,000 from holding Sao Ta Foods or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sao Ta Foods vs. Asia Commercial Bank
Performance |
| Timeline |
| Sao Ta Foods |
| Asia Commercial Bank |
Sao Ta and Asia Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sao Ta and Asia Commercial
The main advantage of trading using opposite Sao Ta and Asia Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, Asia Commercial 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 Asia Commercial will offset losses from the drop in Asia Commercial's long position.| Sao Ta vs. Pha Le Plastics | Sao Ta vs. Vietnam Rubber Group | Sao Ta vs. Petrolimex Information Technology | Sao Ta vs. Viet Thanh Plastic |
| Asia Commercial vs. Sao Ta Foods | Asia Commercial vs. Binh Duong Trade | Asia Commercial vs. Investment and Industrial | Asia Commercial vs. Saigon Beer Alcohol |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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