Correlation Between Sao Ta and Binhthuan Agriculture

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

By analyzing existing cross correlation between Sao Ta Foods and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Sao Ta and Binhthuan Agriculture 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 Sao Ta with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Binhthuan Agriculture.

Diversification Opportunities for Sao Ta and Binhthuan Agriculture

0.34

Correlation Coefficient

Sao Ta  Binhthuan Agriculture

Weak diversification

The 3 months correlation between Sao and Binhthuan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Sao Ta 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 Sao Ta Foods are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Sao Ta i.e., Sao Ta and Binhthuan Agriculture go up and down completely randomly.

Pair Corralation between Sao Ta and Binhthuan Agriculture

Assuming the 90 days trading horizon Sao Ta Foods is expected to generate 0.65 times more return on investment than Binhthuan Agriculture. However, Sao Ta Foods is 1.54 times less risky than Binhthuan Agriculture. It trades about 0.06 of its potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about 0.0 per unit of risk. If you would invest  3,218,604  in Sao Ta Foods on September 26, 2024 and sell it today you would earn a total of  1,526,396  from holding Sao Ta Foods or generate 47.42% return on investment over 90 days.

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

Sao Ta Foods  vs.  Binhthuan Agriculture Services

Sao Ta Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sao Ta Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Sao Ta is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Binhthuan Agriculture

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binhthuan Agriculture Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binhthuan Agriculture displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sao Ta and Binhthuan Agriculture

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

The idea behind Sao Ta Foods and Binhthuan Agriculture Services 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.