Correlation Between Saigon Beer and HNX

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

Diversification Opportunities for Saigon Beer and HNX

0.58

Correlation Coefficient

Saigon Beer  HNX

Very weak diversification

The 3 months correlation between Saigon and HNX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Beer Alcohol and HNX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNX 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 HNX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNX has no effect on the direction of Saigon Beer i.e., Saigon Beer and HNX go up and down completely randomly.

Pair Corralation between Saigon Beer and HNX

Assuming the 90 days trading horizon Saigon Beer Alcohol is expected to generate 1.72 times more return on investment than HNX. However, Saigon Beer is 1.72 times more volatile than HNX. It trades about -0.14 of its potential returns per unit of risk. HNX is currently generating about -0.28 per unit of risk. If you would invest  5,520,698  in Saigon Beer Alcohol on October 24, 2024 and sell it today you would lose (160,698) from holding Saigon Beer Alcohol or give up 2.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Saigon Beer Alcohol  vs.  HNX

Pair Trading with Saigon Beer and HNX

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

The idea behind Saigon Beer Alcohol and HNX 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.