Correlation Between Song Hong and Ducgiang Chemicals
Can any of the company-specific risk be diversified away by investing in both Song Hong and Ducgiang Chemicals 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 Ducgiang Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Hong Garment and Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on Song Hong and Ducgiang Chemicals 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 Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Ducgiang Chemicals.
Diversification Opportunities for Song Hong and Ducgiang Chemicals
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Song and Ducgiang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Garment and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals 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 Garment are associated (or correlated) with Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of Song Hong i.e., Song Hong and Ducgiang Chemicals go up and down completely randomly.
Pair Corralation between Song Hong and Ducgiang Chemicals
Assuming the 90 days trading horizon Song Hong Garment is expected to under-perform the Ducgiang Chemicals. In addition to that, Song Hong is 1.63 times more volatile than Ducgiang Chemicals Detergent. It trades about -0.16 of its total potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about -0.25 per unit of volatility. If you would invest 11,600,000 in Ducgiang Chemicals Detergent on October 20, 2024 and sell it today you would lose (620,000) from holding Ducgiang Chemicals Detergent or give up 5.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Hong Garment vs. Ducgiang Chemicals Detergent
Performance |
| Timeline |
| Song Hong Garment |
| Ducgiang Chemicals |
Song Hong and Ducgiang Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Ducgiang Chemicals
The main advantage of trading using opposite Song Hong and Ducgiang Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Ducgiang Chemicals 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 Ducgiang Chemicals will offset losses from the drop in Ducgiang Chemicals' long position.| Song Hong vs. Ducgiang Chemicals Detergent | Song Hong vs. TDT Investment and | Song Hong vs. Hoang Huy Investment | Song Hong vs. Dinhvu Port 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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