Correlation Between Song Hong and Pha Lai
Can any of the company-specific risk be diversified away by investing in both Song Hong and Pha Lai 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 Pha Lai 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 Pha Lai Thermal, you can compare the effects of market volatilities on Song Hong and Pha Lai 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 Pha Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Pha Lai.
Diversification Opportunities for Song Hong and Pha Lai
Very weak diversification
The 3 months correlation between Song and Pha is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Aluminum and Pha Lai Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Lai Thermal 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 Pha Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Lai Thermal has no effect on the direction of Song Hong i.e., Song Hong and Pha Lai go up and down completely randomly.
Pair Corralation between Song Hong and Pha Lai
Assuming the 90 days trading horizon Song Hong is expected to generate 1.33 times less return on investment than Pha Lai. In addition to that, Song Hong is 1.84 times more volatile than Pha Lai Thermal. It trades about 0.01 of its total potential returns per unit of risk. Pha Lai Thermal is currently generating about 0.02 per unit of volatility. If you would invest 1,098,747 in Pha Lai Thermal on September 14, 2024 and sell it today you would earn a total of 41,253 from holding Pha Lai Thermal or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Hong Aluminum vs. Pha Lai Thermal
Performance |
| Timeline |
| Song Hong Aluminum |
| Pha Lai Thermal |
Song Hong and Pha Lai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Pha Lai
The main advantage of trading using opposite Song Hong and Pha Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Pha Lai 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 Pha Lai will offset losses from the drop in Pha Lai'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 |
| Pha Lai vs. Transport and Industry | Pha Lai vs. PetroVietnam Transportation Corp | Pha Lai vs. Song Hong Aluminum | Pha Lai vs. VTC Telecommunications JSC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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