Correlation Between SGC Energy and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both SGC Energy and Sungdo Engineering 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 SGC Energy and Sungdo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SGC Energy Co and Sungdo Engineering Construction, you can compare the effects of market volatilities on SGC Energy and Sungdo Engineering 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 SGC Energy with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGC Energy and Sungdo Engineering.
Diversification Opportunities for SGC Energy and Sungdo Engineering
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SGC and Sungdo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SGC Energy Co and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and SGC Energy 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 SGC Energy Co are associated (or correlated) with Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of SGC Energy i.e., SGC Energy and Sungdo Engineering go up and down completely randomly.
Pair Corralation between SGC Energy and Sungdo Engineering
Assuming the 90 days trading horizon SGC Energy Co is expected to generate 0.48 times more return on investment than Sungdo Engineering. However, SGC Energy Co is 2.1 times less risky than Sungdo Engineering. It trades about -0.09 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about -0.07 per unit of risk. If you would invest 2,640,000 in SGC Energy Co on September 5, 2024 and sell it today you would lose (75,000) from holding SGC Energy Co or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SGC Energy Co vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| SGC Energy |
| Sungdo Engineering |
SGC Energy and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SGC Energy and Sungdo Engineering
The main advantage of trading using opposite SGC Energy and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGC Energy position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| SGC Energy vs. Sungdo Engineering Construction | SGC Energy vs. SEOJEON ELECTRIC MACHINERY | SGC Energy vs. Shinsegae Information Communication | SGC Energy vs. Korea Information Communications |
| Sungdo Engineering vs. JYP Entertainment Corp | Sungdo Engineering vs. Next Entertainment World | Sungdo Engineering vs. Cube Entertainment | Sungdo Engineering vs. Korea Petro Chemical |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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