Correlation Between Damsan JSC and Sao Mai

Can any of the company-specific risk be diversified away by investing in both Damsan JSC and Sao Mai 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 Damsan JSC and Sao Mai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Damsan JSC and Sao Mai Group, you can compare the effects of market volatilities on Damsan JSC and Sao Mai 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 Damsan JSC with a short position of Sao Mai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and Sao Mai.

Diversification Opportunities for Damsan JSC and Sao Mai

-0.07

Correlation Coefficient

Damsan JSC  Sao Mai

Good diversification

The 3 months correlation between Damsan and Sao is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and Sao Mai Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Mai Group and Damsan JSC 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 Damsan JSC are associated (or correlated) with Sao Mai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Mai Group has no effect on the direction of Damsan JSC i.e., Damsan JSC and Sao Mai go up and down completely randomly.

Pair Corralation between Damsan JSC and Sao Mai

Assuming the 90 days trading horizon Damsan JSC is expected to generate 1.61 times more return on investment than Sao Mai. However, Damsan JSC is 1.61 times more volatile than Sao Mai Group. It trades about 0.1 of its potential returns per unit of risk. Sao Mai Group is currently generating about -0.15 per unit of risk. If you would invest  881,000  in Damsan JSC on December 29, 2024 and sell it today you would earn a total of  78,000  from holding Damsan JSC or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Damsan JSC  vs.  Sao Mai Group

Damsan JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Damsan JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Damsan JSC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sao Mai Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sao Mai Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Damsan JSC and Sao Mai

The main advantage of trading using opposite Damsan JSC and Sao Mai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Damsan JSC position performs unexpectedly, Sao Mai 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 Sao Mai will offset losses from the drop in Sao Mai's long position.

The idea behind Damsan JSC and Sao Mai Group 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.