Correlation Between Saigon Machinery and FPT Corp

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

Diversification Opportunities for Saigon Machinery and FPT Corp

0.55

Correlation Coefficient

Saigon Machinery  FPT Corp

Very weak diversification

The 3 months correlation between Saigon and FPT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Machinery Spare and FPT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Corp 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 FPT Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Corp has no effect on the direction of Saigon Machinery i.e., Saigon Machinery and FPT Corp go up and down completely randomly.

Pair Corralation between Saigon Machinery and FPT Corp

Assuming the 90 days trading horizon Saigon Machinery Spare is expected to generate 2.52 times more return on investment than FPT Corp. However, Saigon Machinery is 2.52 times more volatile than FPT Corp. It trades about 0.16 of its potential returns per unit of risk. FPT Corp is currently generating about 0.12 per unit of risk. If you would invest  812,659  in Saigon Machinery Spare on October 9, 2024 and sell it today you would earn a total of  757,341  from holding Saigon Machinery Spare or generate 93.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	46.94%
Values	Daily Returns

Saigon Machinery Spare  vs.  FPT Corp

Saigon Machinery Spare

Risk-Adjusted Performance

44 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Machinery Spare are ranked lower than 44 (%) 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.

FPT Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FPT Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FPT Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Saigon Machinery and FPT Corp

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

The idea behind Saigon Machinery Spare and FPT Corp 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.