Correlation Between Saigon Beer and Idico JSC

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

Diversification Opportunities for Saigon Beer and Idico JSC

0.18

Correlation Coefficient

Saigon Beer  Idico JSC

Average diversification

The 3 months correlation between Saigon and Idico is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Beer Alcohol and Idico JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idico JSC 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 Idico JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idico JSC has no effect on the direction of Saigon Beer i.e., Saigon Beer and Idico JSC go up and down completely randomly.

Pair Corralation between Saigon Beer and Idico JSC

Assuming the 90 days trading horizon Saigon Beer Alcohol is expected to under-perform the Idico JSC. But the stock apears to be less risky and, when comparing its historical volatility, Saigon Beer Alcohol is 1.3 times less risky than Idico JSC. The stock trades about -0.19 of its potential returns per unit of risk. The Idico JSC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  5,620,000  in Idico JSC on December 21, 2024 and sell it today you would lose (230,000) from holding Idico JSC or give up 4.09% 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.  Idico JSC

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 latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Idico JSC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Idico JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Idico JSC 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 Idico JSC

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

The idea behind Saigon Beer Alcohol and Idico JSC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.