Correlation Between Sao Ta and SMC Investment
Can any of the company-specific risk be diversified away by investing in both Sao Ta and SMC Investment 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 SMC Investment 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 SMC Investment Trading, you can compare the effects of market volatilities on Sao Ta and SMC Investment 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 SMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and SMC Investment.
Diversification Opportunities for Sao Ta and SMC Investment
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sao and SMC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and SMC Investment Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Investment Trading 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 SMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Investment Trading has no effect on the direction of Sao Ta i.e., Sao Ta and SMC Investment go up and down completely randomly.
Pair Corralation between Sao Ta and SMC Investment
Assuming the 90 days trading horizon Sao Ta Foods is expected to under-perform the SMC Investment. But the stock apears to be less risky and, when comparing its historical volatility, Sao Ta Foods is 3.19 times less risky than SMC Investment. The stock trades about 0.0 of its potential returns per unit of risk. The SMC Investment Trading is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 697,000 in SMC Investment Trading on October 17, 2024 and sell it today you would earn a total of 52,000 from holding SMC Investment Trading or generate 7.46% 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. SMC Investment Trading
Performance |
| Timeline |
| Sao Ta Foods |
| SMC Investment Trading |
Sao Ta and SMC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sao Ta and SMC Investment
The main advantage of trading using opposite Sao Ta and SMC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, SMC Investment 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 SMC Investment will offset losses from the drop in SMC Investment's long position.| Sao Ta vs. Construction And Investment | Sao Ta vs. Pha Lai Thermal | Sao Ta vs. Development Investment Construction | Sao Ta vs. Ba Ria Thermal |
| SMC Investment vs. Song Hong Construction | SMC Investment vs. Techno Agricultural Supplying | SMC Investment vs. Binh Duong Construction | SMC Investment vs. Sao Ta Foods |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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