Correlation Between Song Hong and Japan Vietnam

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

By analyzing existing cross correlation between Song Hong Aluminum and Japan Vietnam Medical, you can compare the effects of market volatilities on Song Hong and Japan Vietnam 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 Japan Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Japan Vietnam.

Diversification Opportunities for Song Hong and Japan Vietnam

-0.22

Correlation Coefficient

Song Hong  Japan Vietnam

Very good diversification

The 3 months correlation between Song and Japan is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Aluminum and Japan Vietnam Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Vietnam Medical 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 Aluminum are associated (or correlated) with Japan Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Vietnam Medical has no effect on the direction of Song Hong i.e., Song Hong and Japan Vietnam go up and down completely randomly.

Pair Corralation between Song Hong and Japan Vietnam

Assuming the 90 days trading horizon Song Hong Aluminum is expected to under-perform the Japan Vietnam. In addition to that, Song Hong is 1.35 times more volatile than Japan Vietnam Medical. It trades about -0.05 of its total potential returns per unit of risk. Japan Vietnam Medical is currently generating about 0.03 per unit of volatility. If you would invest  358,000  in Japan Vietnam Medical on September 29, 2024 and sell it today you would earn a total of  22,000  from holding Japan Vietnam Medical or generate 6.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Song Hong Aluminum  vs.  Japan Vietnam Medical

Song Hong Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Song Hong Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Japan Vietnam Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Vietnam Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Japan Vietnam displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Song Hong and Japan Vietnam

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

The idea behind Song Hong Aluminum and Japan Vietnam Medical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..