Correlation Between Song Hong and Transimex Transportation
Can any of the company-specific risk be diversified away by investing in both Song Hong and Transimex Transportation 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 Transimex Transportation 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 Transimex Transportation JSC, you can compare the effects of market volatilities on Song Hong and Transimex Transportation 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 Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Transimex Transportation.
Diversification Opportunities for Song Hong and Transimex Transportation
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Song and Transimex is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Construction and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation 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 Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of Song Hong i.e., Song Hong and Transimex Transportation go up and down completely randomly.
Pair Corralation between Song Hong and Transimex Transportation
Assuming the 90 days trading horizon Song Hong Construction is expected to under-perform the Transimex Transportation. In addition to that, Song Hong is 1.2 times more volatile than Transimex Transportation JSC. It trades about -0.03 of its total potential returns per unit of risk. Transimex Transportation JSC is currently generating about -0.03 per unit of volatility. If you would invest 1,800,000 in Transimex Transportation JSC on August 31, 2024 and sell it today you would lose (90,000) from holding Transimex Transportation JSC or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.02% |
| Values | Daily Returns |
Song Hong Construction vs. Transimex Transportation JSC
Performance |
| Timeline |
| Song Hong Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Transimex Transportation |
Song Hong and Transimex Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Transimex Transportation
The main advantage of trading using opposite Song Hong and Transimex Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Transimex Transportation 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 Transimex Transportation will offset losses from the drop in Transimex Transportation's long position.| Song Hong vs. Pacific Petroleum Transportation | Song Hong vs. Vietnam Petroleum Transport | Song Hong vs. Saigon Beer Alcohol | Song Hong vs. LDG Investment JSC |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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