Correlation Between Saigon Thuong and Song Hong
Can any of the company-specific risk be diversified away by investing in both Saigon Thuong 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 Saigon Thuong and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saigon Thuong Tin and Song Hong Construction, you can compare the effects of market volatilities on Saigon Thuong 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 Saigon Thuong with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saigon Thuong and Song Hong.
Diversification Opportunities for Saigon Thuong and Song Hong
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Saigon and Song is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Thuong Tin and Song Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Construction and Saigon Thuong 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 Thuong Tin 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 Construction has no effect on the direction of Saigon Thuong i.e., Saigon Thuong and Song Hong go up and down completely randomly.
Pair Corralation between Saigon Thuong and Song Hong
Assuming the 90 days trading horizon Saigon Thuong is expected to generate 81.88 times less return on investment than Song Hong. But when comparing it to its historical volatility, Saigon Thuong Tin is 2.98 times less risky than Song Hong. It trades about 0.0 of its potential returns per unit of risk. Song Hong Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 720,000 in Song Hong Construction on September 5, 2024 and sell it today you would earn a total of 70,000 from holding Song Hong Construction or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
Saigon Thuong Tin vs. Song Hong Construction
Performance |
| Timeline |
| Saigon Thuong Tin |
| Song Hong Construction |
Saigon Thuong and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saigon Thuong and Song Hong
The main advantage of trading using opposite Saigon Thuong and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saigon Thuong 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.| Saigon Thuong vs. Song Hong Construction | Saigon Thuong vs. RangDong Plastic JSC | Saigon Thuong vs. Saigon Beer Alcohol | Saigon Thuong vs. Dong Nai Plastic |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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