Correlation Between Tien Phong and SMC Investment
Can any of the company-specific risk be diversified away by investing in both Tien Phong and SMC Investment 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 Tien Phong and SMC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tien Phong Plastic and SMC Investment Trading, you can compare the effects of market volatilities on Tien Phong and SMC Investment 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 Tien Phong with a short position of SMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tien Phong and SMC Investment.
Diversification Opportunities for Tien Phong and SMC Investment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tien and SMC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tien Phong Plastic and SMC Investment Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Investment Trading and Tien Phong 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 Tien Phong Plastic are associated (or correlated) with SMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Investment Trading has no effect on the direction of Tien Phong i.e., Tien Phong and SMC Investment go up and down completely randomly.
Pair Corralation between Tien Phong and SMC Investment
Assuming the 90 days trading horizon Tien Phong is expected to generate 3.3 times less return on investment than SMC Investment. But when comparing it to its historical volatility, Tien Phong Plastic is 1.84 times less risky than SMC Investment. It trades about 0.03 of its potential returns per unit of risk. SMC Investment Trading is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 702,000 in SMC Investment Trading on October 12, 2024 and sell it today you would earn a total of 64,000 from holding SMC Investment Trading or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tien Phong Plastic vs. SMC Investment Trading
Performance |
| Timeline |
| Tien Phong Plastic |
| SMC Investment Trading |
Tien Phong and SMC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tien Phong and SMC Investment
The main advantage of trading using opposite Tien Phong and SMC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tien Phong position performs unexpectedly, SMC Investment 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 SMC Investment will offset losses from the drop in SMC Investment's long position.| Tien Phong vs. Transport and Industry | Tien Phong vs. Saigon Machinery Spare | Tien Phong vs. DIC Holdings Construction | Tien Phong vs. POST TELECOMMU |
| SMC Investment vs. Elcom Technology Communications | SMC Investment vs. Petrolimex Petrochemical JSC | SMC Investment vs. Pha Le Plastics | SMC Investment vs. Sao Vang Rubber |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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