Correlation Between Sao Vang and Pha Le

Can any of the company-specific risk be diversified away by investing in both Sao Vang and Pha Le 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 Sao Vang and Pha Le into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sao Vang Rubber and Pha Le Plastics, you can compare the effects of market volatilities on Sao Vang and Pha Le 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 Sao Vang with a short position of Pha Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Vang and Pha Le.

Diversification Opportunities for Sao Vang and Pha Le

0.43

Correlation Coefficient

Sao Vang  Pha Le

Very weak diversification

The 3 months correlation between Sao and Pha is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sao Vang Rubber and Pha Le Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Le Plastics and Sao Vang 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 Sao Vang Rubber are associated (or correlated) with Pha Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Le Plastics has no effect on the direction of Sao Vang i.e., Sao Vang and Pha Le go up and down completely randomly.

Pair Corralation between Sao Vang and Pha Le

Assuming the 90 days trading horizon Sao Vang Rubber is expected to generate 1.57 times more return on investment than Pha Le. However, Sao Vang is 1.57 times more volatile than Pha Le Plastics. It trades about 0.12 of its potential returns per unit of risk. Pha Le Plastics is currently generating about 0.17 per unit of risk. If you would invest  2,410,000  in Sao Vang Rubber on October 10, 2024 and sell it today you would earn a total of  140,000  from holding Sao Vang Rubber or generate 5.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Sao Vang Rubber  vs.  Pha Le Plastics

Sao Vang Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sao Vang Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pha Le Plastics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pha Le Plastics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pha Le may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sao Vang and Pha Le

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

The idea behind Sao Vang Rubber and Pha Le Plastics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..