Correlation Between Sao Ta and Vietnam National
Can any of the company-specific risk be diversified away by investing in both Sao Ta and Vietnam National 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 Vietnam National 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 Vietnam National Reinsurance, you can compare the effects of market volatilities on Sao Ta and Vietnam National 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 Vietnam National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Vietnam National.
Diversification Opportunities for Sao Ta and Vietnam National
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sao and Vietnam is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei 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 Vietnam National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of Sao Ta i.e., Sao Ta and Vietnam National go up and down completely randomly.
Pair Corralation between Sao Ta and Vietnam National
Assuming the 90 days trading horizon Sao Ta is expected to generate 9.44 times less return on investment than Vietnam National. But when comparing it to its historical volatility, Sao Ta Foods is 1.37 times less risky than Vietnam National. It trades about 0.05 of its potential returns per unit of risk. Vietnam National Reinsurance is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,190,000 in Vietnam National Reinsurance on November 7, 2024 and sell it today you would earn a total of 160,000 from holding Vietnam National Reinsurance or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Sao Ta Foods vs. Vietnam National Reinsurance
Performance |
| Timeline |
| Sao Ta Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Vietnam National Rei |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Sao Ta and Vietnam National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sao Ta and Vietnam National
The main advantage of trading using opposite Sao Ta and Vietnam National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, Vietnam National 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 Vietnam National will offset losses from the drop in Vietnam National's long position.| Sao Ta vs. FIT INVEST JSC | Sao Ta vs. Damsan JSC | Sao Ta vs. Binhthuan Agriculture Services | Sao Ta vs. Bentre Aquaproduct Import |
| Vietnam National vs. Binhthuan Agriculture Services | Vietnam National vs. Transport and Industry | Vietnam National vs. HVC Investment and | Vietnam National vs. Elcom Technology Communications |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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