Correlation Between BaoMinh Insurance and SMC Investment

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

By analyzing existing cross correlation between BaoMinh Insurance Corp and SMC Investment Trading, you can compare the effects of market volatilities on BaoMinh Insurance and SMC Investment 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 BaoMinh Insurance with a short position of SMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BaoMinh Insurance and SMC Investment.

Diversification Opportunities for BaoMinh Insurance and SMC Investment

-0.14

Correlation Coefficient

BaoMinh Insurance  SMC Investment

Good diversification

The 3 months correlation between BaoMinh and SMC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BaoMinh Insurance Corp and SMC Investment Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Investment Trading and BaoMinh Insurance 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 BaoMinh Insurance Corp are associated (or correlated) with SMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Investment Trading has no effect on the direction of BaoMinh Insurance i.e., BaoMinh Insurance and SMC Investment go up and down completely randomly.

Pair Corralation between BaoMinh Insurance and SMC Investment

Assuming the 90 days trading horizon BaoMinh Insurance Corp is expected to generate 0.42 times more return on investment than SMC Investment. However, BaoMinh Insurance Corp is 2.4 times less risky than SMC Investment. It trades about -0.04 of its potential returns per unit of risk. SMC Investment Trading is currently generating about -0.13 per unit of risk. If you would invest  2,195,000  in BaoMinh Insurance Corp on December 21, 2024 and sell it today you would lose (70,000) from holding BaoMinh Insurance Corp or give up 3.19% of portfolio value over 90 days.

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

BaoMinh Insurance Corp  vs.  SMC Investment Trading

BaoMinh Insurance Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BaoMinh Insurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, BaoMinh Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SMC Investment Trading

Risk-Adjusted Performance

Very Weak

Over the last 90 days SMC Investment Trading 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BaoMinh Insurance and SMC Investment

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

The idea behind BaoMinh Insurance Corp and SMC Investment Trading 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.