Correlation Between Songwon Industrial and Aprogen Healthcare
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Aprogen Healthcare 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 Aprogen Healthcare 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 Aprogen Healthcare Games, you can compare the effects of market volatilities on Songwon Industrial and Aprogen Healthcare 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 Aprogen Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Aprogen Healthcare.
Diversification Opportunities for Songwon Industrial and Aprogen Healthcare
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Songwon and Aprogen is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Aprogen Healthcare Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen Healthcare Games 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 Aprogen Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen Healthcare Games has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Aprogen Healthcare go up and down completely randomly.
Pair Corralation between Songwon Industrial and Aprogen Healthcare
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 0.49 times more return on investment than Aprogen Healthcare. However, Songwon Industrial Co is 2.06 times less risky than Aprogen Healthcare. It trades about 0.2 of its potential returns per unit of risk. Aprogen Healthcare Games is currently generating about 0.08 per unit of risk. If you would invest 1,047,000 in Songwon Industrial Co on October 30, 2024 and sell it today you would earn a total of 204,000 from holding Songwon Industrial Co or generate 19.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Aprogen Healthcare Games
Performance |
| Timeline |
| Songwon Industrial |
| Aprogen Healthcare Games |
Songwon Industrial and Aprogen Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Aprogen Healthcare
The main advantage of trading using opposite Songwon Industrial and Aprogen Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Aprogen Healthcare 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 Aprogen Healthcare will offset losses from the drop in Aprogen Healthcare's long position.The idea behind Songwon Industrial Co and Aprogen Healthcare Games pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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