Correlation Between Sao Vang and Binh Minh

Can any of the company-specific risk be diversified away by investing in both Sao Vang and Binh Minh 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 Binh Minh 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 Binh Minh Plastics, you can compare the effects of market volatilities on Sao Vang and Binh Minh 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 Binh Minh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Vang and Binh Minh.

Diversification Opportunities for Sao Vang and Binh Minh

-0.49

Correlation Coefficient

Sao Vang  Binh Minh

Very good diversification

The 3 months correlation between Sao and Binh is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sao Vang Rubber and Binh Minh Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Minh Plastics 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 Binh Minh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Minh Plastics has no effect on the direction of Sao Vang i.e., Sao Vang and Binh Minh go up and down completely randomly.

Pair Corralation between Sao Vang and Binh Minh

Assuming the 90 days trading horizon Sao Vang Rubber is expected to generate 2.37 times more return on investment than Binh Minh. However, Sao Vang is 2.37 times more volatile than Binh Minh Plastics. It trades about 0.1 of its potential returns per unit of risk. Binh Minh Plastics is currently generating about -0.04 per unit of risk. If you would invest  2,500,000  in Sao Vang Rubber on May 21, 2025 and sell it today you would earn a total of  300,000  from holding Sao Vang Rubber or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	69.23%
Values	Daily Returns

Sao Vang Rubber  vs.  Binh Minh Plastics

Sao Vang Rubber

Risk-Adjusted Performance

Fair

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 very weak fundamental indicators, Sao Vang displayed solid returns over the last few months and may actually be approaching a breakup point.

Binh Minh Plastics

Risk-Adjusted Performance

Weakest

Over the last 90 days Binh Minh Plastics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Binh Minh is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sao Vang and Binh Minh

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

The idea behind Sao Vang Rubber and Binh Minh Plastics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.