Correlation Between South Books and Transimex Transportation
Can any of the company-specific risk be diversified away by investing in both South Books and Transimex Transportation 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 Transimex Transportation 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 Transimex Transportation JSC, you can compare the effects of market volatilities on South Books and Transimex Transportation 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 Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Books and Transimex Transportation.
Diversification Opportunities for South Books and Transimex Transportation
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between South and Transimex is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding South Books Educational and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation 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 Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of South Books i.e., South Books and Transimex Transportation go up and down completely randomly.
Pair Corralation between South Books and Transimex Transportation
Assuming the 90 days trading horizon South Books Educational is expected to generate 1.54 times more return on investment than Transimex Transportation. However, South Books is 1.54 times more volatile than Transimex Transportation JSC. It trades about 0.1 of its potential returns per unit of risk. Transimex Transportation JSC is currently generating about -0.01 per unit of risk. If you would invest 1,260,000 in South Books Educational on September 14, 2024 and sell it today you would earn a total of 170,000 from holding South Books Educational or generate 13.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 44.9% |
| Values | Daily Returns |
South Books Educational vs. Transimex Transportation JSC
Performance |
| Timeline |
| South Books Educational |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Transimex Transportation |
South Books and Transimex Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Books and Transimex Transportation
The main advantage of trading using opposite South Books and Transimex Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Books position performs unexpectedly, Transimex Transportation 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 Transimex Transportation will offset losses from the drop in Transimex Transportation's long position.| South Books vs. Transimex Transportation JSC | South Books vs. Petrovietnam Drilling Mud | South Books vs. Global Electrical Technology | South Books vs. PetroVietnam Drilling Well |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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