Correlation Between Song Hong and Cotec Construction
Can any of the company-specific risk be diversified away by investing in both Song Hong and Cotec Construction 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 Cotec Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Hong Aluminum and Cotec Construction JSC, you can compare the effects of market volatilities on Song Hong and Cotec Construction 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 Cotec Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Cotec Construction.
Diversification Opportunities for Song Hong and Cotec Construction
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Song and Cotec is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Aluminum and Cotec Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cotec Construction JSC 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 Aluminum are associated (or correlated) with Cotec Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cotec Construction JSC has no effect on the direction of Song Hong i.e., Song Hong and Cotec Construction go up and down completely randomly.
Pair Corralation between Song Hong and Cotec Construction
Assuming the 90 days trading horizon Song Hong Aluminum is expected to under-perform the Cotec Construction. In addition to that, Song Hong is 1.61 times more volatile than Cotec Construction JSC. It trades about -0.07 of its total potential returns per unit of risk. Cotec Construction JSC is currently generating about -0.03 per unit of volatility. If you would invest 6,660,000 in Cotec Construction JSC on September 3, 2024 and sell it today you would lose (80,000) from holding Cotec Construction JSC or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Song Hong Aluminum vs. Cotec Construction JSC
Performance |
| Timeline |
| Song Hong Aluminum |
| Cotec Construction JSC |
Song Hong and Cotec Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Cotec Construction
The main advantage of trading using opposite Song Hong and Cotec Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Cotec Construction 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 Cotec Construction will offset losses from the drop in Cotec Construction's long position.| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong vs. Alphanam ME |
| Cotec Construction vs. FIT INVEST JSC | Cotec Construction vs. Damsan JSC | Cotec Construction vs. An Phat Plastic | Cotec Construction vs. Alphanam ME |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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