Correlation Between SMC Investment and Da Nang

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

Diversification Opportunities for SMC Investment and Da Nang

-0.19

Correlation Coefficient

SMC Investment  Da Nang

Good diversification

The 3 months correlation between SMC and DXV is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SMC Investment Trading and Da Nang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Nang Construction 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 Da Nang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Nang Construction has no effect on the direction of SMC Investment i.e., SMC Investment and Da Nang go up and down completely randomly.

Pair Corralation between SMC Investment and Da Nang

Assuming the 90 days trading horizon SMC Investment Trading is expected to generate 0.98 times more return on investment than Da Nang. However, SMC Investment Trading is 1.02 times less risky than Da Nang. It trades about 0.13 of its potential returns per unit of risk. Da Nang Construction is currently generating about -0.03 per unit of risk. If you would invest  701,000  in SMC Investment Trading on October 7, 2024 and sell it today you would earn a total of  110,000  from holding SMC Investment Trading or generate 15.69% return on investment over 90 days.

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

SMC Investment Trading  vs.  Da Nang Construction

SMC Investment Trading

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SMC Investment Trading are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, SMC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Da Nang Construction

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Da Nang Construction are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Da Nang is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SMC Investment and Da Nang

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

The idea behind SMC Investment Trading and Da Nang Construction 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.