Correlation Between Saigon Beer and Bao Ngoc

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

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

Diversification Opportunities for Saigon Beer and Bao Ngoc

0.28

Correlation Coefficient

Saigon Beer  Bao Ngoc

Modest diversification

The 3 months correlation between Saigon and Bao is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Beer Alcohol and Bao Ngoc Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bao Ngoc Investment and Saigon Beer 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 Saigon Beer Alcohol are associated (or correlated) with Bao Ngoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bao Ngoc Investment has no effect on the direction of Saigon Beer i.e., Saigon Beer and Bao Ngoc go up and down completely randomly.

Pair Corralation between Saigon Beer and Bao Ngoc

Assuming the 90 days trading horizon Saigon Beer Alcohol is expected to generate 0.43 times more return on investment than Bao Ngoc. However, Saigon Beer Alcohol is 2.32 times less risky than Bao Ngoc. It trades about 0.06 of its potential returns per unit of risk. Bao Ngoc Investment is currently generating about -0.01 per unit of risk. If you would invest  5,580,000  in Saigon Beer Alcohol on September 15, 2024 and sell it today you would earn a total of  160,000  from holding Saigon Beer Alcohol or generate 2.87% return on investment over 90 days.

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

Saigon Beer Alcohol  vs.  Bao Ngoc Investment

Saigon Beer Alcohol

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Beer Alcohol are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Saigon Beer is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Bao Ngoc Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Saigon Beer and Bao Ngoc

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

The idea behind Saigon Beer Alcohol and Bao Ngoc Investment 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.