Correlation Between Tienlen Steel and Saigon Viendong

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

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

Diversification Opportunities for Tienlen Steel and Saigon Viendong

0.58

Correlation Coefficient

Tienlen Steel  Saigon Viendong

Very weak diversification

The 3 months correlation between Tienlen and Saigon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Saigon Viendong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Viendong Tech and Tienlen Steel 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 Tienlen Steel Corp are associated (or correlated) with Saigon Viendong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Viendong Tech has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Saigon Viendong go up and down completely randomly.

Pair Corralation between Tienlen Steel and Saigon Viendong

Assuming the 90 days trading horizon Tienlen Steel Corp is expected to generate 1.36 times more return on investment than Saigon Viendong. However, Tienlen Steel is 1.36 times more volatile than Saigon Viendong Technology. It trades about 0.15 of its potential returns per unit of risk. Saigon Viendong Technology is currently generating about 0.01 per unit of risk. If you would invest  461,000  in Tienlen Steel Corp on December 22, 2024 and sell it today you would earn a total of  94,000  from holding Tienlen Steel Corp or generate 20.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.92%
Values	Daily Returns

Tienlen Steel Corp  vs.  Saigon Viendong Technology

Tienlen Steel Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tienlen Steel Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Tienlen Steel displayed solid returns over the last few months and may actually be approaching a breakup point.

Saigon Viendong Tech

Risk-Adjusted Performance

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.

Pair Trading with Tienlen Steel and Saigon Viendong

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

The idea behind Tienlen Steel Corp and Saigon Viendong Technology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.