Correlation Between Southern Rubber and Sao Vang

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

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

Diversification Opportunities for Southern Rubber and Sao Vang

-0.37

Correlation Coefficient

Southern Rubber  Sao Vang

Very good diversification

The 3 months correlation between Southern and Sao is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry 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 Southern Rubber 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 Southern Rubber Industry 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 Southern Rubber i.e., Southern Rubber and Sao Vang go up and down completely randomly.

Pair Corralation between Southern Rubber and Sao Vang

Assuming the 90 days trading horizon Southern Rubber Industry is expected to under-perform the Sao Vang. But the stock apears to be less risky and, when comparing its historical volatility, Southern Rubber Industry is 1.49 times less risky than Sao Vang. The stock trades about -0.05 of its potential returns per unit of risk. The Sao Vang Rubber is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,550,000  in Sao Vang Rubber on December 22, 2024 and sell it today you would earn a total of  95,000  from holding Sao Vang Rubber or generate 3.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.88%
Values	Daily Returns

Southern Rubber Industry  vs.  Sao Vang Rubber

Southern Rubber Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Rubber Industry 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.

Sao Vang Rubber

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sao Vang Rubber are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Sao Vang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Southern Rubber and Sao Vang

The main advantage of trading using opposite Southern Rubber and Sao Vang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber 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 Southern Rubber Industry 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.