Correlation Between POT and Song Hong
Can any of the company-specific risk be diversified away by investing in both POT and Song Hong 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 POT and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PostTelecommunication Equipment and Song Hong Construction, you can compare the effects of market volatilities on POT and Song Hong 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 POT with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of POT and Song Hong.
Diversification Opportunities for POT and Song Hong
Modest diversification
The 3 months correlation between POT and Song is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PostTelecommunication Equipmen and Song Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Construction and POT 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 PostTelecommunication Equipment are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Construction has no effect on the direction of POT i.e., POT and Song Hong go up and down completely randomly.
Pair Corralation between POT and Song Hong
Assuming the 90 days trading horizon PostTelecommunication Equipment is expected to generate 2.89 times more return on investment than Song Hong. However, POT is 2.89 times more volatile than Song Hong Construction. It trades about 0.14 of its potential returns per unit of risk. Song Hong Construction is currently generating about -0.03 per unit of risk. If you would invest 1,550,000 in PostTelecommunication Equipment on December 5, 2024 and sell it today you would earn a total of 180,000 from holding PostTelecommunication Equipment or generate 11.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 94.74% |
Values | Daily Returns |
PostTelecommunication Equipmen vs. Song Hong Construction
Performance |
Timeline |
PostTelecommunication |
Song Hong Construction |
POT and Song Hong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with POT and Song Hong
The main advantage of trading using opposite POT and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POT position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.POT vs. Century Synthetic Fiber | POT vs. Petrolimex Information Technology | POT vs. DOMESCO Medical Import | POT vs. Petrolimex Petrochemical JSC |
Song Hong vs. South Basic Chemicals | Song Hong vs. Fecon Mining JSC | Song Hong vs. Hochiminh City Metal | Song Hong vs. Hai An Transport |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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