Correlation Between Songwon Industrial and Sinil Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Sinil Pharmaceutical 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 Songwon Industrial and Sinil Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Sinil Pharmaceutical Co, you can compare the effects of market volatilities on Songwon Industrial and Sinil Pharmaceutical 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 Songwon Industrial with a short position of Sinil Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Sinil Pharmaceutical.
Diversification Opportunities for Songwon Industrial and Sinil Pharmaceutical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Songwon and Sinil is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Sinil Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinil Pharmaceutical and Songwon Industrial 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 Songwon Industrial Co are associated (or correlated) with Sinil Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinil Pharmaceutical has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Sinil Pharmaceutical go up and down completely randomly.
Pair Corralation between Songwon Industrial and Sinil Pharmaceutical
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 1.61 times more return on investment than Sinil Pharmaceutical. However, Songwon Industrial is 1.61 times more volatile than Sinil Pharmaceutical Co. It trades about 0.35 of its potential returns per unit of risk. Sinil Pharmaceutical Co is currently generating about 0.11 per unit of risk. If you would invest 1,081,000 in Songwon Industrial Co on November 1, 2024 and sell it today you would earn a total of 170,000 from holding Songwon Industrial Co or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Sinil Pharmaceutical Co
Performance |
| Timeline |
| Songwon Industrial |
| Sinil Pharmaceutical |
Songwon Industrial and Sinil Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Sinil Pharmaceutical
The main advantage of trading using opposite Songwon Industrial and Sinil Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Sinil Pharmaceutical 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 Sinil Pharmaceutical will offset losses from the drop in Sinil Pharmaceutical's long position.| Songwon Industrial vs. Daewon Chemical Co | Songwon Industrial vs. Solus Advanced Materials | Songwon Industrial vs. Union Materials Corp | Songwon Industrial vs. INNOX Advanced Materials |
| Sinil Pharmaceutical vs. Korea Industrial Co | Sinil Pharmaceutical vs. PJ Metal Co | Sinil Pharmaceutical vs. Shinil Industrial Co | Sinil Pharmaceutical vs. Songwon Industrial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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