Correlation Between Sung Bo and SH Energy
Can any of the company-specific risk be diversified away by investing in both Sung Bo and SH Energy 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 Sung Bo and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sung Bo Chemicals and SH Energy Chemical, you can compare the effects of market volatilities on Sung Bo and SH Energy 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 Sung Bo with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and SH Energy.
Diversification Opportunities for Sung Bo and SH Energy
Average diversification
The 3 months correlation between Sung and 002360 is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Sung Bo 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 Sung Bo Chemicals are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Sung Bo i.e., Sung Bo and SH Energy go up and down completely randomly.
Pair Corralation between Sung Bo and SH Energy
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to under-perform the SH Energy. But the stock apears to be less risky and, when comparing its historical volatility, Sung Bo Chemicals is 2.56 times less risky than SH Energy. The stock trades about -0.07 of its potential returns per unit of risk. The SH Energy Chemical is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 64,100 in SH Energy Chemical on August 27, 2024 and sell it today you would lose (9,600) from holding SH Energy Chemical or give up 14.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. SH Energy Chemical
Performance |
| Timeline |
| Sung Bo Chemicals |
| SH Energy Chemical |
Sung Bo and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and SH Energy
The main advantage of trading using opposite Sung Bo and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.| Sung Bo vs. AptaBio Therapeutics | Sung Bo vs. Daewoo SBI SPAC | Sung Bo vs. Dream Security co | Sung Bo vs. Microfriend |
| SH Energy vs. AptaBio Therapeutics | SH Energy vs. Daewoo SBI SPAC | SH Energy vs. Dream Security co | SH Energy vs. Microfriend |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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