Correlation Between Tin Nghia and South Books

Can any of the company-specific risk be diversified away by investing in both Tin Nghia and South Books 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 Tin Nghia and South Books into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tin Nghia Industrial and South Books Educational, you can compare the effects of market volatilities on Tin Nghia and South Books 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 Tin Nghia with a short position of South Books. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tin Nghia and South Books.

Diversification Opportunities for Tin Nghia and South Books

0.6

Correlation Coefficient

Tin Nghia  South Books

Poor diversification

The 3 months correlation between Tin and South is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tin Nghia Industrial and South Books Educational in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Books Educational and Tin Nghia 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 Tin Nghia Industrial are associated (or correlated) with South Books. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Books Educational has no effect on the direction of Tin Nghia i.e., Tin Nghia and South Books go up and down completely randomly.

Pair Corralation between Tin Nghia and South Books

Assuming the 90 days trading horizon Tin Nghia is expected to generate 1.53 times less return on investment than South Books. But when comparing it to its historical volatility, Tin Nghia Industrial is 2.33 times less risky than South Books. It trades about 0.06 of its potential returns per unit of risk. South Books Educational is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,258,919  in South Books Educational on December 20, 2024 and sell it today you would earn a total of  41,081  from holding South Books Educational or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.19%
Values	Daily Returns

Tin Nghia Industrial  vs.  South Books Educational

Tin Nghia Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tin Nghia Industrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tin Nghia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

South Books Educational

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Tin Nghia and South Books

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

The idea behind Tin Nghia Industrial and South Books Educational 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.