Correlation Between Saigon Telecommunicatio and Damsan JSC

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

By analyzing existing cross correlation between Saigon Telecommunication Technologies and Damsan JSC, you can compare the effects of market volatilities on Saigon Telecommunicatio and Damsan 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 Telecommunicatio with a short position of Damsan JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saigon Telecommunicatio and Damsan JSC.

Diversification Opportunities for Saigon Telecommunicatio and Damsan JSC

-0.65

Correlation Coefficient

Saigon Telecommunicatio  Damsan JSC

Excellent diversification

The 3 months correlation between Saigon and Damsan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Telecommunication Techn and Damsan JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damsan JSC and Saigon Telecommunicatio 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 Telecommunication Technologies are associated (or correlated) with Damsan JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damsan JSC has no effect on the direction of Saigon Telecommunicatio i.e., Saigon Telecommunicatio and Damsan JSC go up and down completely randomly.

Pair Corralation between Saigon Telecommunicatio and Damsan JSC

Assuming the 90 days trading horizon Saigon Telecommunication Technologies is expected to generate 1.21 times more return on investment than Damsan JSC. However, Saigon Telecommunicatio is 1.21 times more volatile than Damsan JSC. It trades about 0.21 of its potential returns per unit of risk. Damsan JSC is currently generating about -0.1 per unit of risk. If you would invest  1,520,000  in Saigon Telecommunication Technologies on October 24, 2024 and sell it today you would earn a total of  460,000  from holding Saigon Telecommunication Technologies or generate 30.26% return on investment over 90 days.

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

Saigon Telecommunication Techn  vs.  Damsan JSC

Saigon Telecommunicatio

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Telecommunication Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Saigon Telecommunicatio displayed solid returns over the last few months and may actually be approaching a breakup point.

Damsan JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damsan JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic 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 Telecommunicatio and Damsan JSC

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

The idea behind Saigon Telecommunication Technologies and Damsan 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.