Correlation Between Sung Bo and Sang A
Can any of the company-specific risk be diversified away by investing in both Sung Bo and Sang A 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 Sang A 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 Sang A Frontec CoLtd, you can compare the effects of market volatilities on Sung Bo and Sang A 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 Sang A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Sang A.
Diversification Opportunities for Sung Bo and Sang A
Poor diversification
The 3 months correlation between Sung and Sang is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Sang A Frontec CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sang A Frontec 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 Sang A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sang A Frontec has no effect on the direction of Sung Bo i.e., Sung Bo and Sang A go up and down completely randomly.
Pair Corralation between Sung Bo and Sang A
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.47 times more return on investment than Sang A. However, Sung Bo Chemicals is 2.13 times less risky than Sang A. It trades about -0.06 of its potential returns per unit of risk. Sang A Frontec CoLtd is currently generating about -0.09 per unit of risk. If you would invest 280,068 in Sung Bo Chemicals on September 29, 2024 and sell it today you would lose (27,068) from holding Sung Bo Chemicals or give up 9.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. Sang A Frontec CoLtd
Performance |
| Timeline |
| Sung Bo Chemicals |
| Sang A Frontec |
Sung Bo and Sang A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and Sang A
The main advantage of trading using opposite Sung Bo and Sang A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, Sang A 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 Sang A will offset losses from the drop in Sang A's long position.| Sung Bo vs. ABCO Electronics Co | Sung Bo vs. Samsung Electronics Co | Sung Bo vs. SK Chemicals Co | Sung Bo vs. DB Financial Investment |
| Sang A vs. Sung Bo Chemicals | Sang A vs. Korea Investment Holdings | Sang A vs. KTB Investment Securities | Sang A vs. Miwon Chemicals Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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