Correlation Between South Books and Song Hong
Can any of the company-specific risk be diversified away by investing in both South Books 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 South Books and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Books Educational and Song Hong Garment, you can compare the effects of market volatilities on South Books 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 South Books with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Books and Song Hong.
Diversification Opportunities for South Books and Song Hong
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between South and Song is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding South Books Educational and Song Hong Garment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Garment and South Books 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 South Books Educational 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 Garment has no effect on the direction of South Books i.e., South Books and Song Hong go up and down completely randomly.
Pair Corralation between South Books and Song Hong
Assuming the 90 days trading horizon South Books Educational is expected to generate 1.9 times more return on investment than Song Hong. However, South Books is 1.9 times more volatile than Song Hong Garment. It trades about 0.05 of its potential returns per unit of risk. Song Hong Garment is currently generating about 0.02 per unit of risk. If you would invest 1,240,000 in South Books Educational on September 3, 2024 and sell it today you would earn a total of 60,000 from holding South Books Educational or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 40.16% |
| Values | Daily Returns |
South Books Educational vs. Song Hong Garment
Performance |
| Timeline |
| South Books Educational |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Song Hong Garment |
South Books and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Books and Song Hong
The main advantage of trading using opposite South Books and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Books 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.| South Books vs. Alphanam ME | South Books vs. Hochiminh City Metal | South Books vs. Atesco Industrial Cartering | South Books vs. Danang Education Investment |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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