Correlation Between Danh Khoi and SMC Investment

Can any of the company-specific risk be diversified away by investing in both Danh Khoi and SMC Investment 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 Danh Khoi and SMC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Danh Khoi Group and SMC Investment Trading, you can compare the effects of market volatilities on Danh Khoi and SMC Investment 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 Danh Khoi with a short position of SMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danh Khoi and SMC Investment.

Diversification Opportunities for Danh Khoi and SMC Investment

0.23

Correlation Coefficient

Danh Khoi  SMC Investment

Modest diversification

The 3 months correlation between Danh and SMC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Danh Khoi Group and SMC Investment Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Investment Trading and Danh Khoi 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 Danh Khoi Group are associated (or correlated) with SMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Investment Trading has no effect on the direction of Danh Khoi i.e., Danh Khoi and SMC Investment go up and down completely randomly.

Pair Corralation between Danh Khoi and SMC Investment

Assuming the 90 days trading horizon Danh Khoi Group is expected to generate 1.13 times more return on investment than SMC Investment. However, Danh Khoi is 1.13 times more volatile than SMC Investment Trading. It trades about 0.02 of its potential returns per unit of risk. SMC Investment Trading is currently generating about 0.0 per unit of risk. If you would invest  440,000  in Danh Khoi Group on September 29, 2024 and sell it today you would earn a total of  50,000  from holding Danh Khoi Group or generate 11.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Danh Khoi Group  vs.  SMC Investment Trading

Danh Khoi Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danh Khoi Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Danh Khoi displayed solid returns over the last few months and may actually be approaching a breakup point.

SMC Investment Trading

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SMC Investment Trading are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, SMC Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Danh Khoi and SMC Investment

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

The idea behind Danh Khoi Group and SMC Investment Trading 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.