Correlation Between SMC Investment and Thanh Dat

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

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

Diversification Opportunities for SMC Investment and Thanh Dat

0.41

Correlation Coefficient

SMC Investment  Thanh Dat

Very weak diversification

The 3 months correlation between SMC and Thanh is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SMC Investment Trading and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment and SMC Investment 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 SMC Investment Trading are associated (or correlated) with Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of SMC Investment i.e., SMC Investment and Thanh Dat go up and down completely randomly.

Pair Corralation between SMC Investment and Thanh Dat

Assuming the 90 days trading horizon SMC Investment Trading is expected to generate 1.62 times more return on investment than Thanh Dat. However, SMC Investment is 1.62 times more volatile than Thanh Dat Investment. It trades about 0.05 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about 0.06 per unit of risk. If you would invest  794,000  in SMC Investment Trading on October 1, 2024 and sell it today you would earn a total of  66,000  from holding SMC Investment Trading or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

SMC Investment Trading  vs.  Thanh Dat Investment

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 weak fundamental indicators, SMC Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thanh Dat Investment

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with SMC Investment and Thanh Dat

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

The idea behind SMC Investment Trading and Thanh Dat Investment 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.