Correlation Between Song Hong and Fecon Mining
Can any of the company-specific risk be diversified away by investing in both Song Hong and Fecon Mining 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 Fecon Mining 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 Fecon Mining JSC, you can compare the effects of market volatilities on Song Hong and Fecon Mining 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 Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Fecon Mining.
Diversification Opportunities for Song Hong and Fecon Mining
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Song and Fecon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Aluminum and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining 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 Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Song Hong i.e., Song Hong and Fecon Mining go up and down completely randomly.
Pair Corralation between Song Hong and Fecon Mining
Assuming the 90 days trading horizon Song Hong Aluminum is expected to generate 1.93 times more return on investment than Fecon Mining. However, Song Hong is 1.93 times more volatile than Fecon Mining JSC. It trades about -0.1 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about -0.23 per unit of risk. If you would invest 480,000 in Song Hong Aluminum on September 2, 2024 and sell it today you would lose (30,000) from holding Song Hong Aluminum or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Song Hong Aluminum vs. Fecon Mining JSC
Performance |
| Timeline |
| Song Hong Aluminum |
| Fecon Mining JSC |
Song Hong and Fecon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Fecon Mining
The main advantage of trading using opposite Song Hong and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Fecon Mining 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 Fecon Mining will offset losses from the drop in Fecon Mining'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 |
| Fecon Mining vs. Ha Long Investment | Fecon Mining vs. Everland Investment JSC | Fecon Mining vs. Hochiminh City Metal | Fecon Mining vs. Vu Dang Investment |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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