Correlation Between Saigon Machinery and Song Hong

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

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

Diversification Opportunities for Saigon Machinery and Song Hong

-0.36

Correlation Coefficient

Saigon Machinery  Song Hong

Very good diversification

The 3 months correlation between Saigon and Song is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Saigon Machinery Spare and Song Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Construction and Saigon Machinery 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 Saigon Machinery Spare are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Construction has no effect on the direction of Saigon Machinery i.e., Saigon Machinery and Song Hong go up and down completely randomly.

Pair Corralation between Saigon Machinery and Song Hong

Assuming the 90 days trading horizon Saigon Machinery is expected to generate 1.81 times less return on investment than Song Hong. In addition to that, Saigon Machinery is 1.51 times more volatile than Song Hong Construction. It trades about 0.08 of its total potential returns per unit of risk. Song Hong Construction is currently generating about 0.23 per unit of volatility. If you would invest  850,000  in Song Hong Construction on May 6, 2025 and sell it today you would earn a total of  470,000  from holding Song Hong Construction or generate 55.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Saigon Machinery Spare  vs.  Song Hong Construction

Saigon Machinery Spare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Machinery Spare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Saigon Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Song Hong Construction

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Song Hong Construction are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Song Hong displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saigon Machinery and Song Hong

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

The idea behind Saigon Machinery Spare and Song Hong Construction 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 Global Correlations module to find global opportunities by holding instruments from different markets.