Correlation Between Vietnam Dairy and SCG Construction
Can any of the company-specific risk be diversified away by investing in both Vietnam Dairy and SCG Construction 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 Vietnam Dairy and SCG Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Dairy Products and SCG Construction JSC, you can compare the effects of market volatilities on Vietnam Dairy and SCG Construction 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 Vietnam Dairy with a short position of SCG Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Dairy and SCG Construction.
Diversification Opportunities for Vietnam Dairy and SCG Construction
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vietnam and SCG is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Dairy Products and SCG Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCG Construction JSC and Vietnam Dairy 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 Vietnam Dairy Products are associated (or correlated) with SCG Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCG Construction JSC has no effect on the direction of Vietnam Dairy i.e., Vietnam Dairy and SCG Construction go up and down completely randomly.
Pair Corralation between Vietnam Dairy and SCG Construction
Assuming the 90 days trading horizon Vietnam Dairy Products is expected to under-perform the SCG Construction. In addition to that, Vietnam Dairy is 1.73 times more volatile than SCG Construction JSC. It trades about -0.03 of its total potential returns per unit of risk. SCG Construction JSC is currently generating about -0.01 per unit of volatility. If you would invest 6,780,000 in SCG Construction JSC on August 27, 2024 and sell it today you would lose (220,000) from holding SCG Construction JSC or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Dairy Products vs. SCG Construction JSC
Performance |
| Timeline |
| Vietnam Dairy Products |
| SCG Construction JSC |
Vietnam Dairy and SCG Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Dairy and SCG Construction
The main advantage of trading using opposite Vietnam Dairy and SCG Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Dairy position performs unexpectedly, SCG Construction 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 SCG Construction will offset losses from the drop in SCG Construction's long position.| Vietnam Dairy vs. Industrial Urban Development | Vietnam Dairy vs. TDT Investment and | Vietnam Dairy vs. Saigon Beer Alcohol | Vietnam Dairy vs. Vu Dang 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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