Correlation Between Tien Phong and Sao Vang

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

By analyzing existing cross correlation between Tien Phong Plastic and Sao Vang Rubber, you can compare the effects of market volatilities on Tien Phong and Sao Vang 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 Tien Phong with a short position of Sao Vang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tien Phong and Sao Vang.

Diversification Opportunities for Tien Phong and Sao Vang

-0.51

Correlation Coefficient

Tien Phong  Sao Vang

Excellent diversification

The 3 months correlation between Tien and Sao is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tien Phong Plastic and Sao Vang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Vang Rubber and Tien Phong 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 Tien Phong Plastic are associated (or correlated) with Sao Vang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Vang Rubber has no effect on the direction of Tien Phong i.e., Tien Phong and Sao Vang go up and down completely randomly.

Pair Corralation between Tien Phong and Sao Vang

Assuming the 90 days trading horizon Tien Phong Plastic is expected to generate 0.62 times more return on investment than Sao Vang. However, Tien Phong Plastic is 1.62 times less risky than Sao Vang. It trades about 0.09 of its potential returns per unit of risk. Sao Vang Rubber is currently generating about 0.04 per unit of risk. If you would invest  2,875,780  in Tien Phong Plastic on October 8, 2024 and sell it today you would earn a total of  3,664,220  from holding Tien Phong Plastic or generate 127.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.56%
Values	Daily Returns

Tien Phong Plastic  vs.  Sao Vang Rubber

Tien Phong Plastic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tien Phong Plastic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Tien Phong may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sao Vang Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tien Phong and Sao Vang

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

The idea behind Tien Phong Plastic and Sao Vang Rubber 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.