Correlation Between Songwon Industrial and Alton Sports
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Alton Sports 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 Alton Sports 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 Alton Sports CoLtd, you can compare the effects of market volatilities on Songwon Industrial and Alton Sports 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 Alton Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Alton Sports.
Diversification Opportunities for Songwon Industrial and Alton Sports
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Songwon and Alton is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports CoLtd 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Alton Sports go up and down completely randomly.
Pair Corralation between Songwon Industrial and Alton Sports
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 1.94 times more return on investment than Alton Sports. However, Songwon Industrial is 1.94 times more volatile than Alton Sports CoLtd. It trades about 0.09 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.03 per unit of risk. If you would invest 1,128,000 in Songwon Industrial Co on November 8, 2024 and sell it today you would earn a total of 49,000 from holding Songwon Industrial Co or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Alton Sports CoLtd
Performance |
| Timeline |
| Songwon Industrial |
| Alton Sports CoLtd |
Songwon Industrial and Alton Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Alton Sports
The main advantage of trading using opposite Songwon Industrial and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' long position.| Songwon Industrial vs. Korea Industrial Co | Songwon Industrial vs. Narae Nanotech Corp | Songwon Industrial vs. Kbi Metal Co | Songwon Industrial vs. Hyundai Industrial Co |
| Alton Sports vs. A Tech Solution Co | Alton Sports vs. Eagon Industrial Co | Alton Sports vs. RFTech Co | Alton Sports vs. Dongbang Transport Logistics |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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