Correlation Between Sao Vang and Viet Thanh

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

Diversification Opportunities for Sao Vang and Viet Thanh

-0.35

Correlation Coefficient

Sao Vang  Viet Thanh

Very good diversification

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

Pair Corralation between Sao Vang and Viet Thanh

Assuming the 90 days trading horizon Sao Vang is expected to generate 11.05 times less return on investment than Viet Thanh. In addition to that, Sao Vang is 1.68 times more volatile than Viet Thanh Plastic. It trades about 0.01 of its total potential returns per unit of risk. Viet Thanh Plastic is currently generating about 0.14 per unit of volatility. If you would invest  810,000  in Viet Thanh Plastic on October 3, 2024 and sell it today you would earn a total of  930,000  from holding Viet Thanh Plastic or generate 114.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.44%
Values	Daily Returns

Sao Vang Rubber  vs.  Viet Thanh Plastic

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.

Viet Thanh Plastic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Thanh Plastic are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Viet Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sao Vang and Viet Thanh

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

The idea behind Sao Vang Rubber and Viet Thanh Plastic 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.