Correlation Between Sao Vang and Truong Thanh

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

By analyzing existing cross correlation between Sao Vang Rubber and Truong Thanh Furniture, you can compare the effects of market volatilities on Sao Vang and Truong Thanh 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 Sao Vang with a short position of Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Vang and Truong Thanh.

Diversification Opportunities for Sao Vang and Truong Thanh

0.24

Correlation Coefficient

Sao Vang  Truong Thanh

Modest diversification

The 3 months correlation between Sao and Truong is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sao Vang Rubber and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture and Sao Vang 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 Sao Vang Rubber are associated (or correlated) with Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of Sao Vang i.e., Sao Vang and Truong Thanh go up and down completely randomly.

Pair Corralation between Sao Vang and Truong Thanh

Assuming the 90 days trading horizon Sao Vang Rubber is expected to generate 1.76 times more return on investment than Truong Thanh. However, Sao Vang is 1.76 times more volatile than Truong Thanh Furniture. It trades about 0.03 of its potential returns per unit of risk. Truong Thanh Furniture is currently generating about -0.02 per unit of risk. If you would invest  2,012,746  in Sao Vang Rubber on September 29, 2024 and sell it today you would earn a total of  502,254  from holding Sao Vang Rubber or generate 24.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.71%
Values	Daily Returns

Sao Vang Rubber  vs.  Truong Thanh Furniture

Sao Vang Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sao Vang Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Truong Thanh Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Truong Thanh Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Truong Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sao Vang and Truong Thanh

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

The idea behind Sao Vang Rubber and Truong Thanh Furniture 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.