Correlation Between Saigon Machinery and Cotec Construction
Can any of the company-specific risk be diversified away by investing in both Saigon Machinery and Cotec Construction 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 Machinery and Cotec Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saigon Machinery Spare and Cotec Construction JSC, you can compare the effects of market volatilities on Saigon Machinery and Cotec Construction 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 Machinery with a short position of Cotec Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saigon Machinery and Cotec Construction.
Diversification Opportunities for Saigon Machinery and Cotec Construction
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Saigon and Cotec is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Machinery Spare and Cotec Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cotec Construction JSC and Saigon Machinery 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 Machinery Spare are associated (or correlated) with Cotec Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cotec Construction JSC has no effect on the direction of Saigon Machinery i.e., Saigon Machinery and Cotec Construction go up and down completely randomly.
Pair Corralation between Saigon Machinery and Cotec Construction
Assuming the 90 days trading horizon Saigon Machinery Spare is expected to generate 0.78 times more return on investment than Cotec Construction. However, Saigon Machinery Spare is 1.28 times less risky than Cotec Construction. It trades about 0.45 of its potential returns per unit of risk. Cotec Construction JSC is currently generating about 0.33 per unit of risk. If you would invest 1,570,000 in Saigon Machinery Spare on November 7, 2024 and sell it today you would earn a total of 30,000 from holding Saigon Machinery Spare or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.25% |
| Values | Daily Returns |
Saigon Machinery Spare vs. Cotec Construction JSC
Performance |
| Timeline |
| Saigon Machinery Spare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Excellent
| Cotec Construction JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Saigon Machinery and Cotec Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saigon Machinery and Cotec Construction
The main advantage of trading using opposite Saigon Machinery and Cotec Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saigon Machinery position performs unexpectedly, Cotec Construction 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 Cotec Construction will offset losses from the drop in Cotec Construction's long position.| Saigon Machinery vs. Transport and Industry | Saigon Machinery vs. Innovative Technology Development | Saigon Machinery vs. Vietnam JSCmmercial Bank | Saigon Machinery vs. Elcom Technology Communications |
| Cotec Construction vs. HUD1 Investment and | Cotec Construction vs. Hai An Transport | Cotec Construction vs. Vietnam JSCmmercial Bank | Cotec Construction vs. Elcom Technology Communications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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