Correlation Between Song Hong and Truong Thanh
Can any of the company-specific risk be diversified away by investing in both Song Hong and Truong 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 Truong 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 Truong Thanh Furniture, you can compare the effects of market volatilities on Song Hong and Truong 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 Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Truong Thanh.
Diversification Opportunities for Song Hong and Truong Thanh
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Song and Truong is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Aluminum and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture 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 Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of Song Hong i.e., Song Hong and Truong Thanh go up and down completely randomly.
Pair Corralation between Song Hong and Truong Thanh
Assuming the 90 days trading horizon Song Hong Aluminum is expected to under-perform the Truong Thanh. In addition to that, Song Hong is 1.22 times more volatile than Truong Thanh Furniture. It trades about -0.11 of its total potential returns per unit of risk. Truong Thanh Furniture is currently generating about 0.02 per unit of volatility. If you would invest 301,000 in Truong Thanh Furniture on August 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Truong Thanh Furniture or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Song Hong Aluminum vs. Truong Thanh Furniture
Performance |
| Timeline |
| Song Hong Aluminum |
| Truong Thanh Furniture |
Song Hong and Truong Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Truong Thanh
The main advantage of trading using opposite Song Hong and Truong Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Truong 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 Truong Thanh will offset losses from the drop in Truong Thanh's long position.| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong vs. APG Securities Joint |
| Truong Thanh vs. FIT INVEST JSC | Truong Thanh vs. Damsan JSC | Truong Thanh vs. An Phat Plastic | Truong Thanh vs. APG Securities Joint |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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