Correlation Between KIM GROWTH and Song Hong

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Can any of the company-specific risk be diversified away by investing in both KIM GROWTH and Song Hong 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 KIM GROWTH and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIM GROWTH VN30 and Song Hong Garment, you can compare the effects of market volatilities on KIM GROWTH and Song Hong 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 KIM GROWTH with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIM GROWTH and Song Hong.

Diversification Opportunities for KIM GROWTH and Song Hong

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between KIM and Song is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding KIM GROWTH VN30 and Song Hong Garment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Garment and KIM GROWTH 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 KIM GROWTH VN30 are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Garment has no effect on the direction of KIM GROWTH i.e., KIM GROWTH and Song Hong go up and down completely randomly.

Pair Corralation between KIM GROWTH and Song Hong

Assuming the 90 days trading horizon KIM GROWTH VN30 is expected to under-perform the Song Hong. But the etf apears to be less risky and, when comparing its historical volatility, KIM GROWTH VN30 is 2.19 times less risky than Song Hong. The etf trades about -0.06 of its potential returns per unit of risk. The Song Hong Garment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,219,810  in Song Hong Garment on September 13, 2024 and sell it today you would earn a total of  810,190  from holding Song Hong Garment or generate 19.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.35%
ValuesDaily Returns

KIM GROWTH VN30  vs.  Song Hong Garment

 Performance 
       Timeline  
KIM GROWTH VN30 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in KIM GROWTH VN30 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, KIM GROWTH is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Song Hong Garment 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Song Hong Garment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Song Hong displayed solid returns over the last few months and may actually be approaching a breakup point.

KIM GROWTH and Song Hong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KIM GROWTH and Song Hong

The main advantage of trading using opposite KIM GROWTH and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIM GROWTH position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.
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The idea behind KIM GROWTH VN30 and Song Hong Garment 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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