Correlation Between FIT INVEST and Saigon Machinery

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

By analyzing existing cross correlation between FIT INVEST JSC and Saigon Machinery Spare, you can compare the effects of market volatilities on FIT INVEST and Saigon Machinery 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 FIT INVEST with a short position of Saigon Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT INVEST and Saigon Machinery.

Diversification Opportunities for FIT INVEST and Saigon Machinery

-0.47

Correlation Coefficient

FIT INVEST  Saigon Machinery

Very good diversification

The 3 months correlation between FIT and Saigon is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and Saigon Machinery Spare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Machinery Spare and FIT INVEST 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 FIT INVEST JSC are associated (or correlated) with Saigon Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Machinery Spare has no effect on the direction of FIT INVEST i.e., FIT INVEST and Saigon Machinery go up and down completely randomly.

Pair Corralation between FIT INVEST and Saigon Machinery

Assuming the 90 days trading horizon FIT INVEST is expected to generate 4.08 times less return on investment than Saigon Machinery. But when comparing it to its historical volatility, FIT INVEST JSC is 1.79 times less risky than Saigon Machinery. It trades about 0.03 of its potential returns per unit of risk. Saigon Machinery Spare is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  708,281  in Saigon Machinery Spare on September 20, 2024 and sell it today you would earn a total of  431,719  from holding Saigon Machinery Spare or generate 60.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	60.49%
Values	Daily Returns

FIT INVEST JSC  vs.  Saigon Machinery Spare

FIT INVEST JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Saigon Machinery Spare

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Saigon Machinery Spare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Saigon Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIT INVEST and Saigon Machinery

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

The idea behind FIT INVEST JSC and Saigon Machinery Spare 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.