Correlation Between Tin Nghia and Saigon Viendong
Can any of the company-specific risk be diversified away by investing in both Tin Nghia and Saigon Viendong 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 Tin Nghia and Saigon Viendong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tin Nghia Industrial and Saigon Viendong Technology, you can compare the effects of market volatilities on Tin Nghia and Saigon Viendong 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 Tin Nghia with a short position of Saigon Viendong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tin Nghia and Saigon Viendong.
Diversification Opportunities for Tin Nghia and Saigon Viendong
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tin and Saigon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tin Nghia Industrial and Saigon Viendong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Viendong Tech and Tin Nghia 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 Tin Nghia Industrial are associated (or correlated) with Saigon Viendong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Viendong Tech has no effect on the direction of Tin Nghia i.e., Tin Nghia and Saigon Viendong go up and down completely randomly.
Pair Corralation between Tin Nghia and Saigon Viendong
Assuming the 90 days trading horizon Tin Nghia Industrial is expected to under-perform the Saigon Viendong. But the stock apears to be less risky and, when comparing its historical volatility, Tin Nghia Industrial is 2.29 times less risky than Saigon Viendong. The stock trades about -0.07 of its potential returns per unit of risk. The Saigon Viendong Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,120,000 in Saigon Viendong Technology on November 9, 2024 and sell it today you would earn a total of 70,000 from holding Saigon Viendong Technology or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Tin Nghia Industrial vs. Saigon Viendong Technology
Performance |
| Timeline |
| Tin Nghia Industrial |
Risk-Adjusted Performance
Weak
Weak | Strong |
| Saigon Viendong Tech |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
Tin Nghia and Saigon Viendong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tin Nghia and Saigon Viendong
The main advantage of trading using opposite Tin Nghia and Saigon Viendong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tin Nghia position performs unexpectedly, Saigon Viendong 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 Saigon Viendong will offset losses from the drop in Saigon Viendong's long position.The idea behind Tin Nghia Industrial and Saigon Viendong Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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