Correlation Between MST Investment and Transimex Saigon

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

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

Diversification Opportunities for MST Investment and Transimex Saigon

-0.14

Correlation Coefficient

MST Investment  Transimex Saigon

Good diversification

The 3 months correlation between MST and Transimex is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding MST Investment JSC and Transimex Saigon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Saigon Corp and MST Investment 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 MST Investment JSC are associated (or correlated) with Transimex Saigon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Saigon Corp has no effect on the direction of MST Investment i.e., MST Investment and Transimex Saigon go up and down completely randomly.

Pair Corralation between MST Investment and Transimex Saigon

Assuming the 90 days trading horizon MST Investment JSC is expected to under-perform the Transimex Saigon. In addition to that, MST Investment is 1.22 times more volatile than Transimex Saigon Corp. It trades about -0.05 of its total potential returns per unit of risk. Transimex Saigon Corp is currently generating about -0.01 per unit of volatility. If you would invest  4,270,000  in Transimex Saigon Corp on December 21, 2024 and sell it today you would lose (70,000) from holding Transimex Saigon Corp or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.59%
Values	Daily Returns

MST Investment JSC  vs.  Transimex Saigon Corp

MST Investment JSC

Risk-Adjusted Performance

Very Weak

Over the last 90 days MST Investment JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Transimex Saigon Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with MST Investment and Transimex Saigon

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

The idea behind MST Investment JSC and Transimex Saigon Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.