Correlation Between Song Hong and KIM GROWTH

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

By analyzing existing cross correlation between Song Hong Garment and KIM GROWTH VN30, you can compare the effects of market volatilities on Song Hong and KIM GROWTH 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 Song Hong with a short position of KIM GROWTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and KIM GROWTH.

Diversification Opportunities for Song Hong and KIM GROWTH

-0.62

Correlation Coefficient

Song Hong  KIM GROWTH

Excellent diversification

The 3 months correlation between Song and KIM is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Garment and KIM GROWTH VN30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM GROWTH VN30 and Song Hong 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 Song Hong Garment are associated (or correlated) with KIM GROWTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM GROWTH VN30 has no effect on the direction of Song Hong i.e., Song Hong and KIM GROWTH go up and down completely randomly.

Pair Corralation between Song Hong and KIM GROWTH

Assuming the 90 days trading horizon Song Hong Garment is expected to under-perform the KIM GROWTH. In addition to that, Song Hong is 2.1 times more volatile than KIM GROWTH VN30. It trades about -0.02 of its total potential returns per unit of risk. KIM GROWTH VN30 is currently generating about 0.11 per unit of volatility. If you would invest  874,000  in KIM GROWTH VN30 on September 12, 2024 and sell it today you would earn a total of  18,000  from holding KIM GROWTH VN30 or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.3%
Values	Daily Returns

Song Hong Garment  vs.  KIM GROWTH VN30

Song Hong Garment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Song Hong Garment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Song Hong may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KIM GROWTH VN30

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIM GROWTH VN30 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, KIM GROWTH is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Song Hong and KIM GROWTH

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

The idea behind Song Hong Garment and KIM GROWTH VN30 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.