Correlation Between Golden Bridge and Sungmoon Electronics
Can any of the company-specific risk be diversified away by investing in both Golden Bridge and Sungmoon Electronics 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 Golden Bridge and Sungmoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Bridge Investment and Sungmoon Electronics Co, you can compare the effects of market volatilities on Golden Bridge and Sungmoon Electronics 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 Golden Bridge with a short position of Sungmoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Bridge and Sungmoon Electronics.
Diversification Opportunities for Golden Bridge and Sungmoon Electronics
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Golden and Sungmoon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Golden Bridge Investment and Sungmoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungmoon Electronics and Golden Bridge 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 Golden Bridge Investment are associated (or correlated) with Sungmoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungmoon Electronics has no effect on the direction of Golden Bridge i.e., Golden Bridge and Sungmoon Electronics go up and down completely randomly.
Pair Corralation between Golden Bridge and Sungmoon Electronics
Assuming the 90 days trading horizon Golden Bridge Investment is expected to under-perform the Sungmoon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Golden Bridge Investment is 2.56 times less risky than Sungmoon Electronics. The stock trades about -0.18 of its potential returns per unit of risk. The Sungmoon Electronics Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 650,000 in Sungmoon Electronics Co on November 8, 2024 and sell it today you would lose (175,000) from holding Sungmoon Electronics Co or give up 26.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Bridge Investment vs. Sungmoon Electronics Co
Performance |
| Timeline |
| Golden Bridge Investment |
| Sungmoon Electronics |
Golden Bridge and Sungmoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Bridge and Sungmoon Electronics
The main advantage of trading using opposite Golden Bridge and Sungmoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Bridge position performs unexpectedly, Sungmoon Electronics 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 Sungmoon Electronics will offset losses from the drop in Sungmoon Electronics' long position.| Golden Bridge vs. Kukdo Chemical Co | Golden Bridge vs. Lotte Fine Chemical | Golden Bridge vs. Woorim Machinery Co | Golden Bridge vs. KEPCO Engineering Construction |
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Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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