Correlation Between SCG Construction and Vu Dang
Can any of the company-specific risk be diversified away by investing in both SCG Construction and Vu Dang 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 SCG Construction and Vu Dang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCG Construction JSC and Vu Dang Investment, you can compare the effects of market volatilities on SCG Construction and Vu Dang 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 SCG Construction with a short position of Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG Construction and Vu Dang.
Diversification Opportunities for SCG Construction and Vu Dang
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SCG and SVD is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SCG Construction JSC and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment and SCG Construction 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 SCG Construction JSC are associated (or correlated) with Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of SCG Construction i.e., SCG Construction and Vu Dang go up and down completely randomly.
Pair Corralation between SCG Construction and Vu Dang
Assuming the 90 days trading horizon SCG Construction JSC is expected to under-perform the Vu Dang. But the stock apears to be less risky and, when comparing its historical volatility, SCG Construction JSC is 10.14 times less risky than Vu Dang. The stock trades about -0.12 of its potential returns per unit of risk. The Vu Dang Investment is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 315,000 in Vu Dang Investment on September 14, 2024 and sell it today you would earn a total of 35,000 from holding Vu Dang Investment or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCG Construction JSC vs. Vu Dang Investment
Performance |
| Timeline |
| SCG Construction JSC |
| Vu Dang Investment |
SCG Construction and Vu Dang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCG Construction and Vu Dang
The main advantage of trading using opposite SCG Construction and Vu Dang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCG Construction position performs unexpectedly, Vu Dang 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 Vu Dang will offset losses from the drop in Vu Dang's long position.| SCG Construction vs. FIT INVEST JSC | SCG Construction vs. Damsan JSC | SCG Construction vs. An Phat Plastic | SCG Construction vs. Alphanam ME |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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