Correlation Between Song Hong and Educational Book
Can any of the company-specific risk be diversified away by investing in both Song Hong and Educational Book 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 Song Hong and Educational Book into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Hong Garment and Educational Book In, you can compare the effects of market volatilities on Song Hong and Educational Book 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 Song Hong with a short position of Educational Book. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Educational Book.
Diversification Opportunities for Song Hong and Educational Book
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Song and Educational is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Garment and Educational Book In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Educational Book and Song Hong 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 Song Hong Garment are associated (or correlated) with Educational Book. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Educational Book has no effect on the direction of Song Hong i.e., Song Hong and Educational Book go up and down completely randomly.
Pair Corralation between Song Hong and Educational Book
Assuming the 90 days trading horizon Song Hong Garment is expected to generate 0.6 times more return on investment than Educational Book. However, Song Hong Garment is 1.68 times less risky than Educational Book. It trades about 0.2 of its potential returns per unit of risk. Educational Book In is currently generating about 0.08 per unit of risk. If you would invest 4,800,000 in Song Hong Garment on December 3, 2024 and sell it today you would earn a total of 1,150,000 from holding Song Hong Garment or generate 23.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 55.0% |
Values | Daily Returns |
Song Hong Garment vs. Educational Book In
Performance |
Timeline |
Song Hong Garment |
Educational Book |
Song Hong and Educational Book Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Song Hong and Educational Book
The main advantage of trading using opposite Song Hong and Educational Book positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Educational Book 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 Educational Book will offset losses from the drop in Educational Book's long position.Song Hong vs. Danang Education Investment | Song Hong vs. Agriculture Printing and | Song Hong vs. Educational Book In | Song Hong vs. DIC Holdings Construction |
Educational Book vs. BaoMinh Insurance Corp | Educational Book vs. Van Dien Fused | Educational Book vs. Idico JSC | Educational Book vs. Song Hong Garment |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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