Correlation Between Sao Ta and Binh Minh
Can any of the company-specific risk be diversified away by investing in both Sao Ta and Binh Minh 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 Binh Minh 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 Binh Minh Plastics, you can compare the effects of market volatilities on Sao Ta and Binh Minh 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 Binh Minh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Binh Minh.
Diversification Opportunities for Sao Ta and Binh Minh
Good diversification
The 3 months correlation between Sao and Binh is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Binh Minh Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Minh Plastics 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 Binh Minh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Minh Plastics has no effect on the direction of Sao Ta i.e., Sao Ta and Binh Minh go up and down completely randomly.
Pair Corralation between Sao Ta and Binh Minh
Assuming the 90 days trading horizon Sao Ta Foods is expected to under-perform the Binh Minh. But the stock apears to be less risky and, when comparing its historical volatility, Sao Ta Foods is 2.38 times less risky than Binh Minh. The stock trades about -0.01 of its potential returns per unit of risk. The Binh Minh Plastics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,500,000 in Binh Minh Plastics on October 20, 2024 and sell it today you would earn a total of 240,000 from holding Binh Minh Plastics or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sao Ta Foods vs. Binh Minh Plastics
Performance |
| Timeline |
| Sao Ta Foods |
| Binh Minh Plastics |
Sao Ta and Binh Minh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sao Ta and Binh Minh
The main advantage of trading using opposite Sao Ta and Binh Minh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, Binh Minh 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 Binh Minh will offset losses from the drop in Binh Minh's long position.| Sao Ta vs. FIT INVEST JSC | Sao Ta vs. Damsan JSC | Sao Ta vs. An Phat Plastic | Sao Ta vs. APG Securities Joint |
| Binh Minh vs. Transimex Transportation JSC | Binh Minh vs. South Basic Chemicals | Binh Minh vs. VTC Telecommunications JSC | Binh Minh vs. Pacific Petroleum Transportation |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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