Correlation Between Saigon Beer and Innovative Technology
Can any of the company-specific risk be diversified away by investing in both Saigon Beer and Innovative Technology 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 Saigon Beer and Innovative Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saigon Beer Alcohol and Innovative Technology Development, you can compare the effects of market volatilities on Saigon Beer and Innovative Technology 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 Saigon Beer with a short position of Innovative Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saigon Beer and Innovative Technology.
Diversification Opportunities for Saigon Beer and Innovative Technology
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Saigon and Innovative is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Beer Alcohol and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology and Saigon Beer 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 Saigon Beer Alcohol are associated (or correlated) with Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of Saigon Beer i.e., Saigon Beer and Innovative Technology go up and down completely randomly.
Pair Corralation between Saigon Beer and Innovative Technology
Assuming the 90 days trading horizon Saigon Beer Alcohol is expected to under-perform the Innovative Technology. But the stock apears to be less risky and, when comparing its historical volatility, Saigon Beer Alcohol is 2.92 times less risky than Innovative Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Innovative Technology Development is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,420,000 in Innovative Technology Development on November 7, 2024 and sell it today you would lose (20,000) from holding Innovative Technology Development or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saigon Beer Alcohol vs. Innovative Technology Developm
Performance |
| Timeline |
| Saigon Beer Alcohol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Innovative Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Saigon Beer and Innovative Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saigon Beer and Innovative Technology
The main advantage of trading using opposite Saigon Beer and Innovative Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saigon Beer position performs unexpectedly, Innovative Technology 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 Innovative Technology will offset losses from the drop in Innovative Technology's long position.The idea behind Saigon Beer Alcohol and Innovative Technology Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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