Correlation Between Song Hong and SMC Investment
Can any of the company-specific risk be diversified away by investing in both Song Hong 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 Song Hong and SMC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Hong Construction and SMC Investment Trading, you can compare the effects of market volatilities on Song Hong 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 Song Hong with a short position of SMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and SMC Investment.
Diversification Opportunities for Song Hong and SMC Investment
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Song and SMC is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Construction 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 Song Hong 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 Song Hong Construction 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 Song Hong i.e., Song Hong and SMC Investment go up and down completely randomly.
Pair Corralation between Song Hong and SMC Investment
Assuming the 90 days trading horizon Song Hong Construction is expected to generate 0.94 times more return on investment than SMC Investment. However, Song Hong Construction is 1.07 times less risky than SMC Investment. It trades about 0.05 of its potential returns per unit of risk. SMC Investment Trading is currently generating about -0.01 per unit of risk. If you would invest 530,125 in Song Hong Construction on October 30, 2024 and sell it today you would earn a total of 249,875 from holding Song Hong Construction or generate 47.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.49% |
| Values | Daily Returns |
Song Hong Construction vs. SMC Investment Trading
Performance |
| Timeline |
| Song Hong Construction |
| SMC Investment Trading |
Song Hong and SMC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and SMC Investment
The main advantage of trading using opposite Song Hong and SMC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong 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.| Song Hong vs. Bao Ngoc Investment | Song Hong vs. Vu Dang Investment | Song Hong vs. Tien Giang Investment | Song Hong vs. MST Investment JSC |
| SMC Investment vs. TDT Investment and | SMC Investment vs. Vincom Retail JSC | SMC Investment vs. Dinhvu Port Investment | SMC Investment vs. Japan Vietnam Medical |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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