Correlation Between South Basic and SCG Construction
Can any of the company-specific risk be diversified away by investing in both South Basic and SCG Construction 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 South Basic and SCG Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Basic Chemicals and SCG Construction JSC, you can compare the effects of market volatilities on South Basic and SCG Construction 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 South Basic with a short position of SCG Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and SCG Construction.
Diversification Opportunities for South Basic and SCG Construction
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between South and SCG is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and SCG Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCG Construction JSC and South Basic 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 South Basic Chemicals are associated (or correlated) with SCG Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCG Construction JSC has no effect on the direction of South Basic i.e., South Basic and SCG Construction go up and down completely randomly.
Pair Corralation between South Basic and SCG Construction
Assuming the 90 days trading horizon South Basic Chemicals is expected to generate 7.89 times more return on investment than SCG Construction. However, South Basic is 7.89 times more volatile than SCG Construction JSC. It trades about 0.16 of its potential returns per unit of risk. SCG Construction JSC is currently generating about -0.18 per unit of risk. If you would invest 4,125,000 in South Basic Chemicals on October 10, 2024 and sell it today you would earn a total of 330,000 from holding South Basic Chemicals or generate 8.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
South Basic Chemicals vs. SCG Construction JSC
Performance |
Timeline |
South Basic Chemicals |
SCG Construction JSC |
South Basic and SCG Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with South Basic and SCG Construction
The main advantage of trading using opposite South Basic and SCG Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, SCG Construction 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 SCG Construction will offset losses from the drop in SCG Construction's long position.South Basic vs. Ba Ria Thermal | South Basic vs. PV2 Investment JSC | South Basic vs. Sao Ta Foods | South Basic vs. Vu Dang Investment |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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