Correlation Between Saigon Machinery and Ho Chi

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

Diversification Opportunities for Saigon Machinery and Ho Chi

0.62

Correlation Coefficient

Saigon Machinery  Ho Chi

Poor diversification

The 3 months correlation between Saigon and HDB is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Machinery Spare and Ho Chi Minh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Chi Minh 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 Ho Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Chi Minh has no effect on the direction of Saigon Machinery i.e., Saigon Machinery and Ho Chi go up and down completely randomly.

Pair Corralation between Saigon Machinery and Ho Chi

Assuming the 90 days trading horizon Saigon Machinery Spare is expected to generate 1.72 times more return on investment than Ho Chi. However, Saigon Machinery is 1.72 times more volatile than Ho Chi Minh. It trades about 0.35 of its potential returns per unit of risk. Ho Chi Minh is currently generating about 0.01 per unit of risk. If you would invest  1,070,000  in Saigon Machinery Spare on October 3, 2024 and sell it today you would earn a total of  310,000  from holding Saigon Machinery Spare or generate 28.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	26.56%
Values	Daily Returns

Saigon Machinery Spare  vs.  Ho Chi Minh

Saigon Machinery Spare

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Machinery Spare are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Saigon Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Ho Chi Minh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ho Chi Minh has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Ho Chi 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 Machinery and Ho Chi

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

The idea behind Saigon Machinery Spare and Ho Chi Minh 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.