Correlation Between Song Hong and Nafoods Group
Can any of the company-specific risk be diversified away by investing in both Song Hong and Nafoods Group 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 Nafoods Group 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 Nafoods Group JSC, you can compare the effects of market volatilities on Song Hong and Nafoods Group 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 Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Nafoods Group.
Diversification Opportunities for Song Hong and Nafoods Group
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Song and Nafoods is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Aluminum and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group 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 Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of Song Hong i.e., Song Hong and Nafoods Group go up and down completely randomly.
Pair Corralation between Song Hong and Nafoods Group
Assuming the 90 days trading horizon Song Hong Aluminum is expected to under-perform the Nafoods Group. In addition to that, Song Hong is 1.04 times more volatile than Nafoods Group JSC. It trades about -0.08 of its total potential returns per unit of risk. Nafoods Group JSC is currently generating about 0.06 per unit of volatility. If you would invest 1,736,364 in Nafoods Group JSC on September 3, 2024 and sell it today you would earn a total of 278,636 from holding Nafoods Group JSC or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Song Hong Aluminum vs. Nafoods Group JSC
Performance |
| Timeline |
| Song Hong Aluminum |
| Nafoods Group JSC |
Song Hong and Nafoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Nafoods Group
The main advantage of trading using opposite Song Hong and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Nafoods Group 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 Nafoods Group will offset losses from the drop in Nafoods Group'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 |
| Nafoods Group vs. FIT INVEST JSC | Nafoods Group vs. Damsan JSC | Nafoods Group vs. An Phat Plastic | Nafoods Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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