Correlation Between SMC Investment and Hanoi Plastics
Can any of the company-specific risk be diversified away by investing in both SMC Investment and Hanoi Plastics 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 SMC Investment and Hanoi Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMC Investment Trading and Hanoi Plastics JSC, you can compare the effects of market volatilities on SMC Investment and Hanoi Plastics 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 SMC Investment with a short position of Hanoi Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Investment and Hanoi Plastics.
Diversification Opportunities for SMC Investment and Hanoi Plastics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMC and Hanoi is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SMC Investment Trading and Hanoi Plastics JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Plastics JSC and SMC Investment 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 SMC Investment Trading are associated (or correlated) with Hanoi Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Plastics JSC has no effect on the direction of SMC Investment i.e., SMC Investment and Hanoi Plastics go up and down completely randomly.
Pair Corralation between SMC Investment and Hanoi Plastics
Assuming the 90 days trading horizon SMC Investment Trading is expected to generate 3.74 times more return on investment than Hanoi Plastics. However, SMC Investment is 3.74 times more volatile than Hanoi Plastics JSC. It trades about -0.02 of its potential returns per unit of risk. Hanoi Plastics JSC is currently generating about -0.21 per unit of risk. If you would invest 782,000 in SMC Investment Trading on October 12, 2024 and sell it today you would lose (16,000) from holding SMC Investment Trading or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMC Investment Trading vs. Hanoi Plastics JSC
Performance |
| Timeline |
| SMC Investment Trading |
| Hanoi Plastics JSC |
SMC Investment and Hanoi Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMC Investment and Hanoi Plastics
The main advantage of trading using opposite SMC Investment and Hanoi Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMC Investment position performs unexpectedly, Hanoi Plastics 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 Hanoi Plastics will offset losses from the drop in Hanoi Plastics' long position.| SMC Investment vs. Elcom Technology Communications | SMC Investment vs. Petrolimex Petrochemical JSC | SMC Investment vs. Pha Le Plastics | SMC Investment vs. Sao Vang Rubber |
| Hanoi Plastics vs. IDJ FINANCIAL | Hanoi Plastics vs. SMC Investment Trading | Hanoi Plastics vs. Saigon Viendong Technology | Hanoi Plastics vs. Long Giang 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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