Correlation Between Sung Bo and Daechang Steel
Can any of the company-specific risk be diversified away by investing in both Sung Bo and Daechang Steel 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 Daechang Steel 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 Daechang Steel Co, you can compare the effects of market volatilities on Sung Bo and Daechang Steel 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 Daechang Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Daechang Steel.
Diversification Opportunities for Sung Bo and Daechang Steel
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sung and Daechang is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Daechang Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daechang Steel 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 Daechang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daechang Steel has no effect on the direction of Sung Bo i.e., Sung Bo and Daechang Steel go up and down completely randomly.
Pair Corralation between Sung Bo and Daechang Steel
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.42 times more return on investment than Daechang Steel. However, Sung Bo Chemicals is 2.36 times less risky than Daechang Steel. It trades about 0.02 of its potential returns per unit of risk. Daechang Steel Co is currently generating about -0.01 per unit of risk. If you would invest 247,843 in Sung Bo Chemicals on November 6, 2024 and sell it today you would earn a total of 2,157 from holding Sung Bo Chemicals or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. Daechang Steel Co
Performance |
| Timeline |
| Sung Bo Chemicals |
| Daechang Steel |
Sung Bo and Daechang Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and Daechang Steel
The main advantage of trading using opposite Sung Bo and Daechang Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, Daechang Steel 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 Daechang Steel will offset losses from the drop in Daechang Steel's long position.| Sung Bo vs. Miwon Chemicals Co | Sung Bo vs. Samyang Foods Co | Sung Bo vs. Nice Information Telecommunication | Sung Bo vs. CKH Food Health |
| Daechang Steel vs. FNC Entertainment Co | Daechang Steel vs. Seoul Electronics Telecom | Daechang Steel vs. Nable Communications | Daechang Steel vs. YG Entertainment |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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