Correlation Between Songwon Industrial and Haitai Confectionery
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Haitai Confectionery 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 Haitai Confectionery 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 Haitai Confectionery Foods, you can compare the effects of market volatilities on Songwon Industrial and Haitai Confectionery 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 Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Haitai Confectionery.
Diversification Opportunities for Songwon Industrial and Haitai Confectionery
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Songwon and Haitai is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Haitai Confectionery Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haitai Confectionery 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 Haitai Confectionery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haitai Confectionery has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Haitai Confectionery go up and down completely randomly.
Pair Corralation between Songwon Industrial and Haitai Confectionery
Assuming the 90 days trading horizon Songwon Industrial is expected to generate 1.22 times less return on investment than Haitai Confectionery. In addition to that, Songwon Industrial is 1.17 times more volatile than Haitai Confectionery Foods. It trades about 0.29 of its total potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.42 per unit of volatility. If you would invest 523,880 in Haitai Confectionery Foods on October 9, 2024 and sell it today you would earn a total of 88,120 from holding Haitai Confectionery Foods or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Haitai Confectionery Foods
Performance |
| Timeline |
| Songwon Industrial |
| Haitai Confectionery |
Songwon Industrial and Haitai Confectionery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Haitai Confectionery
The main advantage of trading using opposite Songwon Industrial and Haitai Confectionery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Haitai Confectionery 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 Haitai Confectionery will offset losses from the drop in Haitai Confectionery's long position.| Songwon Industrial vs. SK Chemicals Co | Songwon Industrial vs. Sung Bo Chemicals | Songwon Industrial vs. Daejung Chemicals Metals | Songwon Industrial vs. Hankook Steel Co |
| Haitai Confectionery vs. AptaBio Therapeutics | Haitai Confectionery vs. Daewoo SBI SPAC | Haitai Confectionery vs. Dream Security co | Haitai Confectionery 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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