Correlation Between Song Hong and Duc Thanh
Can any of the company-specific risk be diversified away by investing in both Song Hong and Duc Thanh 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 Duc Thanh 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 Duc Thanh Wood, you can compare the effects of market volatilities on Song Hong and Duc Thanh 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 Duc Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Duc Thanh.
Diversification Opportunities for Song Hong and Duc Thanh
Very good diversification
The 3 months correlation between Song and Duc is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Aluminum and Duc Thanh Wood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duc Thanh Wood 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 Duc Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duc Thanh Wood has no effect on the direction of Song Hong i.e., Song Hong and Duc Thanh go up and down completely randomly.
Pair Corralation between Song Hong and Duc Thanh
Assuming the 90 days trading horizon Song Hong is expected to generate 4.31 times less return on investment than Duc Thanh. In addition to that, Song Hong is 1.85 times more volatile than Duc Thanh Wood. It trades about 0.01 of its total potential returns per unit of risk. Duc Thanh Wood is currently generating about 0.07 per unit of volatility. If you would invest 1,991,788 in Duc Thanh Wood on September 1, 2024 and sell it today you would earn a total of 658,212 from holding Duc Thanh Wood or generate 33.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Hong Aluminum vs. Duc Thanh Wood
Performance |
| Timeline |
| Song Hong Aluminum |
| Duc Thanh Wood |
Song Hong and Duc Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Duc Thanh
The main advantage of trading using opposite Song Hong and Duc Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Duc Thanh 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 Duc Thanh will offset losses from the drop in Duc Thanh'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 |
| Duc Thanh vs. FIT INVEST JSC | Duc Thanh vs. Damsan JSC | Duc Thanh vs. An Phat Plastic | Duc Thanh 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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