Correlation Between Saigon Viendong and Song Hong

Can any of the company-specific risk be diversified away by investing in both Saigon Viendong and Song Hong 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 Saigon Viendong and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saigon Viendong Technology and Song Hong Construction, you can compare the effects of market volatilities on Saigon Viendong and Song Hong 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 Saigon Viendong with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saigon Viendong and Song Hong.

Diversification Opportunities for Saigon Viendong and Song Hong

0.29

Correlation Coefficient

Saigon Viendong  Song Hong

Modest diversification

The 3 months correlation between Saigon and Song is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Viendong Technology and Song Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Construction and Saigon Viendong 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 Saigon Viendong Technology are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Construction has no effect on the direction of Saigon Viendong i.e., Saigon Viendong and Song Hong go up and down completely randomly.

Pair Corralation between Saigon Viendong and Song Hong

Assuming the 90 days trading horizon Saigon Viendong Technology is expected to generate 0.72 times more return on investment than Song Hong. However, Saigon Viendong Technology is 1.38 times less risky than Song Hong. It trades about 0.05 of its potential returns per unit of risk. Song Hong Construction is currently generating about 0.04 per unit of risk. If you would invest  974,670  in Saigon Viendong Technology on October 12, 2024 and sell it today you would earn a total of  165,330  from holding Saigon Viendong Technology or generate 16.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	79.66%
Values	Daily Returns

Saigon Viendong Technology  vs.  Song Hong Construction

Saigon Viendong Tech

Risk-Adjusted Performance

1 of 100

Weak

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

Song Hong Construction

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Song Hong Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating technical and fundamental indicators, Song Hong displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saigon Viendong and Song Hong

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

The idea behind Saigon Viendong Technology and Song Hong 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.