Correlation Between Construction JSC and SSIAM VNFIN

Can any of the company-specific risk be diversified away by investing in both Construction JSC and SSIAM VNFIN 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 Construction JSC and SSIAM VNFIN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Construction JSC No5 and SSIAM VNFIN LEAD, you can compare the effects of market volatilities on Construction JSC and SSIAM VNFIN 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 Construction JSC with a short position of SSIAM VNFIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction JSC and SSIAM VNFIN.

Diversification Opportunities for Construction JSC and SSIAM VNFIN

-0.47

Correlation Coefficient

Construction JSC  SSIAM VNFIN

Very good diversification

The 3 months correlation between Construction and SSIAM is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 and SSIAM VNFIN LEAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VNFIN LEAD and Construction JSC 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 Construction JSC No5 are associated (or correlated) with SSIAM VNFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VNFIN LEAD has no effect on the direction of Construction JSC i.e., Construction JSC and SSIAM VNFIN go up and down completely randomly.

Pair Corralation between Construction JSC and SSIAM VNFIN

Assuming the 90 days trading horizon Construction JSC No5 is expected to generate 5.05 times more return on investment than SSIAM VNFIN. However, Construction JSC is 5.05 times more volatile than SSIAM VNFIN LEAD. It trades about 0.11 of its potential returns per unit of risk. SSIAM VNFIN LEAD is currently generating about 0.08 per unit of risk. If you would invest  1,700,000  in Construction JSC No5 on September 12, 2024 and sell it today you would earn a total of  300,000  from holding Construction JSC No5 or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	62.5%
Values	Daily Returns

Construction JSC No5  vs.  SSIAM VNFIN LEAD

Construction JSC No5

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Construction JSC No5 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction JSC displayed solid returns over the last few months and may actually be approaching a breakup point.

SSIAM VNFIN LEAD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSIAM VNFIN LEAD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SSIAM VNFIN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Construction JSC and SSIAM VNFIN

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

The idea behind Construction JSC No5 and SSIAM VNFIN LEAD 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.