Correlation Between SMC Investment and Duong Hieu

Can any of the company-specific risk be diversified away by investing in both SMC Investment and Duong Hieu 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 SMC Investment and Duong Hieu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SMC Investment Trading and Duong Hieu Trading, you can compare the effects of market volatilities on SMC Investment and Duong Hieu 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 SMC Investment with a short position of Duong Hieu. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Investment and Duong Hieu.

Diversification Opportunities for SMC Investment and Duong Hieu

-0.08

Correlation Coefficient

SMC Investment  Duong Hieu

Good diversification

The 3 months correlation between SMC and Duong is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SMC Investment Trading and Duong Hieu Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duong Hieu Trading and SMC Investment 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 SMC Investment Trading are associated (or correlated) with Duong Hieu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duong Hieu Trading has no effect on the direction of SMC Investment i.e., SMC Investment and Duong Hieu go up and down completely randomly.

Pair Corralation between SMC Investment and Duong Hieu

Assuming the 90 days trading horizon SMC Investment Trading is expected to generate 1.11 times more return on investment than Duong Hieu. However, SMC Investment is 1.11 times more volatile than Duong Hieu Trading. It trades about 0.0 of its potential returns per unit of risk. Duong Hieu Trading is currently generating about 0.0 per unit of risk. If you would invest  785,000  in SMC Investment Trading on September 27, 2024 and sell it today you would lose (21,000) from holding SMC Investment Trading or give up 2.68% of portfolio value over 90 days.

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

SMC Investment Trading  vs.  Duong Hieu Trading

SMC Investment Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMC Investment Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, SMC Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Duong Hieu Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duong Hieu Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Duong Hieu is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SMC Investment and Duong Hieu

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

The idea behind SMC Investment Trading and Duong Hieu Trading 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.