Correlation Between Vu Dang and Song Hong

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Can any of the company-specific risk be diversified away by investing in both Vu Dang 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 Vu Dang and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vu Dang Investment and Song Hong Garment, you can compare the effects of market volatilities on Vu Dang 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 Vu Dang with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vu Dang and Song Hong.

Diversification Opportunities for Vu Dang and Song Hong

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between SVD and Song is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vu Dang Investment 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 Vu Dang 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 Vu Dang Investment 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 Vu Dang i.e., Vu Dang and Song Hong go up and down completely randomly.

Pair Corralation between Vu Dang and Song Hong

Assuming the 90 days trading horizon Vu Dang is expected to generate 4.86 times less return on investment than Song Hong. In addition to that, Vu Dang is 1.68 times more volatile than Song Hong Garment. It trades about 0.05 of its total potential returns per unit of risk. Song Hong Garment is currently generating about 0.39 per unit of volatility. If you would invest  4,635,000  in Song Hong Garment on August 30, 2024 and sell it today you would earn a total of  635,000  from holding Song Hong Garment or generate 13.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Vu Dang Investment  vs.  Song Hong Garment

 Performance 
       Timeline  
Vu Dang Investment 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vu Dang Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Vu Dang displayed solid returns over the last few months and may actually be approaching a breakup point.
Song Hong Garment 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Song Hong Garment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Song Hong may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Vu Dang and Song Hong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vu Dang and Song Hong

The main advantage of trading using opposite Vu Dang and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vu Dang 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.
The idea behind Vu Dang Investment and Song Hong Garment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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