Correlation Between Saigon Beer and Southern Rubber

Can any of the company-specific risk be diversified away by investing in both Saigon Beer and Southern Rubber 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 Southern Rubber 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 Southern Rubber Industry, you can compare the effects of market volatilities on Saigon Beer and Southern Rubber 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 Southern Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saigon Beer and Southern Rubber.

Diversification Opportunities for Saigon Beer and Southern Rubber

0.13

Correlation Coefficient

Saigon Beer  Southern Rubber

Average diversification

The 3 months correlation between Saigon and Southern is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Beer Alcohol and Southern Rubber Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Rubber Industry 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 Southern Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Rubber Industry has no effect on the direction of Saigon Beer i.e., Saigon Beer and Southern Rubber go up and down completely randomly.

Pair Corralation between Saigon Beer and Southern Rubber

Assuming the 90 days trading horizon Saigon Beer Alcohol is expected to under-perform the Southern Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Saigon Beer Alcohol is 2.92 times less risky than Southern Rubber. The stock trades about -0.28 of its potential returns per unit of risk. The Southern Rubber Industry is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,565,000  in Southern Rubber Industry on December 30, 2024 and sell it today you would lose (135,000) from holding Southern Rubber Industry or give up 8.63% of portfolio value over 90 days.

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

Saigon Beer Alcohol  vs.  Southern Rubber Industry

Saigon Beer Alcohol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saigon Beer Alcohol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Southern Rubber Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Rubber Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary 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 Saigon Beer and Southern Rubber

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

The idea behind Saigon Beer Alcohol and Southern Rubber Industry 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.