Correlation Between Plastic Additives and Song Hong
Can any of the company-specific risk be diversified away by investing in both Plastic Additives and Song Hong 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 Plastic Additives and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Additives JSC and Song Hong Garment, you can compare the effects of market volatilities on Plastic Additives and Song Hong 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 Plastic Additives with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Additives and Song Hong.
Diversification Opportunities for Plastic Additives and Song Hong
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Plastic and Song is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Additives JSC and Song Hong Garment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Garment and Plastic Additives 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 Plastic Additives JSC are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Garment has no effect on the direction of Plastic Additives i.e., Plastic Additives and Song Hong go up and down completely randomly.
Pair Corralation between Plastic Additives and Song Hong
Assuming the 90 days trading horizon Plastic Additives JSC is expected to generate 4.23 times more return on investment than Song Hong. However, Plastic Additives is 4.23 times more volatile than Song Hong Garment. It trades about 0.16 of its potential returns per unit of risk. Song Hong Garment is currently generating about 0.13 per unit of risk. If you would invest 630,000 in Plastic Additives JSC on September 2, 2024 and sell it today you would earn a total of 350,000 from holding Plastic Additives JSC or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Plastic Additives JSC vs. Song Hong Garment
Performance |
| Timeline |
| Plastic Additives JSC |
| Song Hong Garment |
Plastic Additives and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Additives and Song Hong
The main advantage of trading using opposite Plastic Additives and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Additives position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.| Plastic Additives vs. Song Hong Garment | Plastic Additives vs. Alphanam ME | Plastic Additives vs. Hochiminh City Metal | Plastic Additives vs. Atesco Industrial Cartering |
| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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