Correlation Between Saigon Machinery and Riverway Management

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

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

Diversification Opportunities for Saigon Machinery and Riverway Management

-0.43

Correlation Coefficient

Saigon Machinery  Riverway Management

Very good diversification

The 3 months correlation between Saigon and Riverway is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Machinery Spare and Riverway Management JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverway Management JSC and Saigon Machinery 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 Machinery Spare are associated (or correlated) with Riverway Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverway Management JSC has no effect on the direction of Saigon Machinery i.e., Saigon Machinery and Riverway Management go up and down completely randomly.

Pair Corralation between Saigon Machinery and Riverway Management

Assuming the 90 days trading horizon Saigon Machinery Spare is expected to generate 1.28 times more return on investment than Riverway Management. However, Saigon Machinery is 1.28 times more volatile than Riverway Management JSC. It trades about 0.65 of its potential returns per unit of risk. Riverway Management JSC is currently generating about -0.02 per unit of risk. If you would invest  1,075,000  in Saigon Machinery Spare on October 8, 2024 and sell it today you would earn a total of  400,000  from holding Saigon Machinery Spare or generate 37.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	40.63%
Values	Daily Returns

Saigon Machinery Spare  vs.  Riverway Management JSC

Saigon Machinery Spare

Risk-Adjusted Performance

40 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Machinery Spare are ranked lower than 40 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Saigon Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Riverway Management JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riverway Management 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 Machinery and Riverway Management

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

The idea behind Saigon Machinery Spare and Riverway Management 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.