Correlation Between Sao Vang and SMC Investment

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

Diversification Opportunities for Sao Vang and SMC Investment

-0.35

Correlation Coefficient

Sao Vang  SMC Investment

Very good diversification

The 3 months correlation between Sao and SMC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sao Vang Rubber and SMC Investment Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Investment Trading 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 SMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Investment Trading has no effect on the direction of Sao Vang i.e., Sao Vang and SMC Investment go up and down completely randomly.

Pair Corralation between Sao Vang and SMC Investment

Assuming the 90 days trading horizon Sao Vang Rubber is expected to generate 1.17 times more return on investment than SMC Investment. However, Sao Vang is 1.17 times more volatile than SMC Investment Trading. It trades about 0.02 of its potential returns per unit of risk. SMC Investment Trading is currently generating about -0.02 per unit of risk. If you would invest  2,496,967  in Sao Vang Rubber on October 9, 2024 and sell it today you would earn a total of  53,033  from holding Sao Vang Rubber or generate 2.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.1%
Values	Daily Returns

Sao Vang Rubber  vs.  SMC Investment Trading

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 latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SMC Investment Trading

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SMC Investment Trading are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, SMC Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sao Vang and SMC Investment

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

The idea behind Sao Vang Rubber and SMC Investment 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.