Correlation Between Sao Ta and Bich Chi
Can any of the company-specific risk be diversified away by investing in both Sao Ta and Bich Chi 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 Bich Chi 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 Bich Chi Food, you can compare the effects of market volatilities on Sao Ta and Bich Chi 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 Bich Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Bich Chi.
Diversification Opportunities for Sao Ta and Bich Chi
Very good diversification
The 3 months correlation between Sao and Bich is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Bich Chi Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bich Chi Food 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 Bich Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bich Chi Food has no effect on the direction of Sao Ta i.e., Sao Ta and Bich Chi go up and down completely randomly.
Pair Corralation between Sao Ta and Bich Chi
Assuming the 90 days trading horizon Sao Ta is expected to generate 1.61 times less return on investment than Bich Chi. But when comparing it to its historical volatility, Sao Ta Foods is 1.8 times less risky than Bich Chi. It trades about 0.06 of its potential returns per unit of risk. Bich Chi Food is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,810,129 in Bich Chi Food on September 2, 2024 and sell it today you would earn a total of 1,189,871 from holding Bich Chi Food or generate 42.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.88% |
| Values | Daily Returns |
Sao Ta Foods vs. Bich Chi Food
Performance |
| Timeline |
| Sao Ta Foods |
| Bich Chi Food |
Sao Ta and Bich Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sao Ta and Bich Chi
The main advantage of trading using opposite Sao Ta and Bich Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, Bich Chi 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 Bich Chi will offset losses from the drop in Bich Chi's long position.The idea behind Sao Ta Foods and Bich Chi Food 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.| Bich Chi vs. Dong Nai Plastic | Bich Chi vs. Tay Ninh Rubber | Bich Chi vs. Vietnam Rubber Group | Bich Chi vs. Hung Hau Agricultural |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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