Correlation Between Sung Bo and Daedong Gear
Can any of the company-specific risk be diversified away by investing in both Sung Bo and Daedong Gear 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 Daedong Gear 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 Daedong Gear Co, you can compare the effects of market volatilities on Sung Bo and Daedong Gear 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 Daedong Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Daedong Gear.
Diversification Opportunities for Sung Bo and Daedong Gear
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sung and Daedong is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Daedong Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Gear 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 Daedong Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Gear has no effect on the direction of Sung Bo i.e., Sung Bo and Daedong Gear go up and down completely randomly.
Pair Corralation between Sung Bo and Daedong Gear
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to under-perform the Daedong Gear. But the stock apears to be less risky and, when comparing its historical volatility, Sung Bo Chemicals is 13.87 times less risky than Daedong Gear. The stock trades about -0.19 of its potential returns per unit of risk. The Daedong Gear Co is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 774,000 in Daedong Gear Co on September 12, 2024 and sell it today you would earn a total of 831,000 from holding Daedong Gear Co or generate 107.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. Daedong Gear Co
Performance |
| Timeline |
| Sung Bo Chemicals |
| Daedong Gear |
Sung Bo and Daedong Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and Daedong Gear
The main advantage of trading using opposite Sung Bo and Daedong Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, Daedong Gear 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 Daedong Gear will offset losses from the drop in Daedong Gear's long position.| Sung Bo vs. LS Materials | Sung Bo vs. Organic Special Pet | Sung Bo vs. Hyundai Engineering Plastics | Sung Bo vs. Phoenix Materials Co |
| Daedong Gear vs. Innowireless Co | Daedong Gear vs. Shinsung Delta Tech | Daedong Gear vs. Amogreentech Co | Daedong Gear vs. Hwangkum Steel Technology |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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