Correlation Between SMC Investment and Vietnam National
Can any of the company-specific risk be diversified away by investing in both SMC Investment and Vietnam National 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 Vietnam National 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 Vietnam National Reinsurance, you can compare the effects of market volatilities on SMC Investment and Vietnam National 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 Vietnam National. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Investment and Vietnam National.
Diversification Opportunities for SMC Investment and Vietnam National
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMC and Vietnam is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SMC Investment Trading and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei 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 Vietnam National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of SMC Investment i.e., SMC Investment and Vietnam National go up and down completely randomly.
Pair Corralation between SMC Investment and Vietnam National
Assuming the 90 days trading horizon SMC Investment Trading is expected to under-perform the Vietnam National. In addition to that, SMC Investment is 4.02 times more volatile than Vietnam National Reinsurance. It trades about -0.05 of its total potential returns per unit of risk. Vietnam National Reinsurance is currently generating about 0.1 per unit of volatility. If you would invest 2,081,818 in Vietnam National Reinsurance on October 26, 2024 and sell it today you would earn a total of 98,182 from holding Vietnam National Reinsurance or generate 4.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SMC Investment Trading vs. Vietnam National Reinsurance
Performance |
Timeline |
SMC Investment Trading |
Vietnam National Rei |
SMC Investment and Vietnam National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SMC Investment and Vietnam National
The main advantage of trading using opposite SMC Investment and Vietnam National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMC Investment position performs unexpectedly, Vietnam National 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 Vietnam National will offset losses from the drop in Vietnam National's long position.SMC Investment vs. FIT INVEST JSC | SMC Investment vs. Damsan JSC | SMC Investment vs. An Phat Plastic | SMC Investment vs. APG Securities Joint |
Vietnam National vs. FIT INVEST JSC | Vietnam National vs. Damsan JSC | Vietnam National vs. An Phat Plastic | Vietnam National vs. APG Securities Joint |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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