Correlation Between Southern Rubber and Thien Long

Can any of the company-specific risk be diversified away by investing in both Southern Rubber and Thien Long 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 Thien Long 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 Thien Long Group, you can compare the effects of market volatilities on Southern Rubber and Thien Long 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 Thien Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Thien Long.

Diversification Opportunities for Southern Rubber and Thien Long

0.84

Correlation Coefficient

Southern Rubber  Thien Long

Very poor diversification

The 3 months correlation between Southern and Thien is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Thien Long Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thien Long Group 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 Thien Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thien Long Group has no effect on the direction of Southern Rubber i.e., Southern Rubber and Thien Long go up and down completely randomly.

Pair Corralation between Southern Rubber and Thien Long

Assuming the 90 days trading horizon Southern Rubber is expected to generate 7.74 times less return on investment than Thien Long. In addition to that, Southern Rubber is 1.01 times more volatile than Thien Long Group. It trades about 0.02 of its total potential returns per unit of risk. Thien Long Group is currently generating about 0.13 per unit of volatility. If you would invest  5,221,740  in Thien Long Group on September 21, 2024 and sell it today you would earn a total of  1,628,260  from holding Thien Long Group or generate 31.18% return on investment over 90 days.

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

Southern Rubber Industry  vs.  Thien Long Group

Southern Rubber Industry

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Rubber Industry are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Southern Rubber displayed solid returns over the last few months and may actually be approaching a breakup point.

Thien Long Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thien Long Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Thien Long displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Rubber and Thien Long

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

The idea behind Southern Rubber Industry and Thien Long 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.