Correlation Between Song Hong and Vietnam Medicinal
Can any of the company-specific risk be diversified away by investing in both Song Hong and Vietnam Medicinal 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 Vietnam Medicinal 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 Vietnam Medicinal Materials, you can compare the effects of market volatilities on Song Hong and Vietnam Medicinal 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 Vietnam Medicinal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Vietnam Medicinal.
Diversification Opportunities for Song Hong and Vietnam Medicinal
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Song and Vietnam is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Garment and Vietnam Medicinal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Medicinal 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 Vietnam Medicinal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Medicinal has no effect on the direction of Song Hong i.e., Song Hong and Vietnam Medicinal go up and down completely randomly.
Pair Corralation between Song Hong and Vietnam Medicinal
Assuming the 90 days trading horizon Song Hong Garment is expected to generate 1.25 times more return on investment than Vietnam Medicinal. However, Song Hong is 1.25 times more volatile than Vietnam Medicinal Materials. It trades about 0.06 of its potential returns per unit of risk. Vietnam Medicinal Materials is currently generating about -0.18 per unit of risk. If you would invest 5,150,000 in Song Hong Garment on September 14, 2024 and sell it today you would earn a total of 120,000 from holding Song Hong Garment or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Hong Garment vs. Vietnam Medicinal Materials
Performance |
| Timeline |
| Song Hong Garment |
| Vietnam Medicinal |
Song Hong and Vietnam Medicinal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Vietnam Medicinal
The main advantage of trading using opposite Song Hong and Vietnam Medicinal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Vietnam Medicinal 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 Medicinal will offset losses from the drop in Vietnam Medicinal's long position.| Song Hong vs. Development Investment Construction | Song Hong vs. Elcom Technology Communications | Song Hong vs. Vina2 Investment and | Song Hong vs. LDG Investment JSC |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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