Correlation Between Sao Ta and BIDV Insurance

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Can any of the company-specific risk be diversified away by investing in both Sao Ta and BIDV Insurance 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 BIDV Insurance 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 BIDV Insurance Corp, you can compare the effects of market volatilities on Sao Ta and BIDV Insurance 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 BIDV Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and BIDV Insurance.

Diversification Opportunities for Sao Ta and BIDV Insurance

SaoBIDVDiversified AwaySaoBIDVDiversified Away100%
0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Sao and BIDV is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and BIDV Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Insurance Corp 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 BIDV Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Insurance Corp has no effect on the direction of Sao Ta i.e., Sao Ta and BIDV Insurance go up and down completely randomly.

Pair Corralation between Sao Ta and BIDV Insurance

Assuming the 90 days trading horizon Sao Ta is expected to generate 5.87 times less return on investment than BIDV Insurance. But when comparing it to its historical volatility, Sao Ta Foods is 1.89 times less risky than BIDV Insurance. It trades about 0.07 of its potential returns per unit of risk. BIDV Insurance Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,400,000  in BIDV Insurance Corp on November 30, 2024 and sell it today you would earn a total of  250,000  from holding BIDV Insurance Corp or generate 7.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sao Ta Foods  vs.  BIDV Insurance Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510
JavaScript chart by amCharts 3.21.15FMC BIC
       Timeline  
Sao Ta Foods 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sao Ta Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Sao Ta is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb45,00046,00047,00048,00049,000
BIDV Insurance Corp 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BIDV Insurance Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, BIDV Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb33,00034,00035,00036,00037,00038,000

Sao Ta and BIDV Insurance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.95-2.21-1.47-0.730.00.731.492.253.013.76 0.10.20.30.4
JavaScript chart by amCharts 3.21.15FMC BIC
       Returns  

Pair Trading with Sao Ta and BIDV Insurance

The main advantage of trading using opposite Sao Ta and BIDV Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, BIDV Insurance 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 BIDV Insurance will offset losses from the drop in BIDV Insurance's long position.
The idea behind Sao Ta Foods and BIDV Insurance Corp 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.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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