Correlation Between Sunny Electronics and Seoul Broadcasting
Can any of the company-specific risk be diversified away by investing in both Sunny Electronics and Seoul Broadcasting 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 Sunny Electronics and Seoul Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Electronics Corp and Seoul Broadcasting System, you can compare the effects of market volatilities on Sunny Electronics and Seoul Broadcasting 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 Sunny Electronics with a short position of Seoul Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Electronics and Seoul Broadcasting.
Diversification Opportunities for Sunny Electronics and Seoul Broadcasting
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sunny and Seoul is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Electronics Corp and Seoul Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Broadcasting System and Sunny Electronics 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 Sunny Electronics Corp are associated (or correlated) with Seoul Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Broadcasting System has no effect on the direction of Sunny Electronics i.e., Sunny Electronics and Seoul Broadcasting go up and down completely randomly.
Pair Corralation between Sunny Electronics and Seoul Broadcasting
Assuming the 90 days trading horizon Sunny Electronics Corp is expected to under-perform the Seoul Broadcasting. In addition to that, Sunny Electronics is 2.2 times more volatile than Seoul Broadcasting System. It trades about -0.01 of its total potential returns per unit of risk. Seoul Broadcasting System is currently generating about -0.01 per unit of volatility. If you would invest 1,521,000 in Seoul Broadcasting System on September 4, 2024 and sell it today you would lose (5,000) from holding Seoul Broadcasting System or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Electronics Corp vs. Seoul Broadcasting System
Performance |
| Timeline |
| Sunny Electronics Corp |
| Seoul Broadcasting System |
Sunny Electronics and Seoul Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Electronics and Seoul Broadcasting
The main advantage of trading using opposite Sunny Electronics and Seoul Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Electronics position performs unexpectedly, Seoul Broadcasting 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 Seoul Broadcasting will offset losses from the drop in Seoul Broadcasting's long position.| Sunny Electronics vs. AptaBio Therapeutics | Sunny Electronics vs. Daewoo SBI SPAC | Sunny Electronics vs. Dream Security co | Sunny Electronics vs. Microfriend |
| Seoul Broadcasting vs. Korea New Network | Seoul Broadcasting vs. ICD Co | Seoul Broadcasting vs. DYPNF CoLtd | Seoul Broadcasting vs. Busan 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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