Correlation Between Alphanam and Sao Vang

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

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

Diversification Opportunities for Alphanam and Sao Vang

0.83

Correlation Coefficient

Alphanam  Sao Vang

Very poor diversification

The 3 months correlation between Alphanam and Sao is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Sao Vang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Vang Rubber and Alphanam 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 Alphanam ME are associated (or correlated) with Sao Vang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Vang Rubber has no effect on the direction of Alphanam i.e., Alphanam and Sao Vang go up and down completely randomly.

Pair Corralation between Alphanam and Sao Vang

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Sao Vang. But the stock apears to be less risky and, when comparing its historical volatility, Alphanam ME is 1.3 times less risky than Sao Vang. The stock trades about -0.18 of its potential returns per unit of risk. The Sao Vang Rubber is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,885,000  in Sao Vang Rubber on September 13, 2024 and sell it today you would lose (475,000) from holding Sao Vang Rubber or give up 16.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	75.56%
Values	Daily Returns

Alphanam ME  vs.  Sao Vang Rubber

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sao Vang Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sao Vang Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alphanam and Sao Vang

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

The idea behind Alphanam ME and Sao Vang Rubber 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.