Correlation Between Korea Refractories and Sungmoon Electronics
Can any of the company-specific risk be diversified away by investing in both Korea Refractories and Sungmoon Electronics 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 Korea Refractories and Sungmoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Refractories Co and Sungmoon Electronics Co, you can compare the effects of market volatilities on Korea Refractories and Sungmoon Electronics 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 Korea Refractories with a short position of Sungmoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Refractories and Sungmoon Electronics.
Diversification Opportunities for Korea Refractories and Sungmoon Electronics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Sungmoon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Korea Refractories Co and Sungmoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungmoon Electronics and Korea Refractories 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 Korea Refractories Co are associated (or correlated) with Sungmoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungmoon Electronics has no effect on the direction of Korea Refractories i.e., Korea Refractories and Sungmoon Electronics go up and down completely randomly.
Pair Corralation between Korea Refractories and Sungmoon Electronics
Assuming the 90 days trading horizon Korea Refractories Co is expected to generate 1.03 times more return on investment than Sungmoon Electronics. However, Korea Refractories is 1.03 times more volatile than Sungmoon Electronics Co. It trades about -0.21 of its potential returns per unit of risk. Sungmoon Electronics Co is currently generating about -0.27 per unit of risk. If you would invest 229,000 in Korea Refractories Co on September 3, 2024 and sell it today you would lose (17,000) from holding Korea Refractories Co or give up 7.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Refractories Co vs. Sungmoon Electronics Co
Performance |
| Timeline |
| Korea Refractories |
| Sungmoon Electronics |
Korea Refractories and Sungmoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Refractories and Sungmoon Electronics
The main advantage of trading using opposite Korea Refractories and Sungmoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Refractories position performs unexpectedly, Sungmoon Electronics 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 Sungmoon Electronics will offset losses from the drop in Sungmoon Electronics' long position.| Korea Refractories vs. Eagon Industrial Co | Korea Refractories vs. Shinhan Financial Group | Korea Refractories vs. Korean Reinsurance Co | Korea Refractories vs. Seoul Food Industrial |
| Sungmoon Electronics vs. Korea Alcohol Industrial | Sungmoon Electronics vs. Jinro Distillers Co | Sungmoon Electronics vs. Taeyang Metal Industrial | Sungmoon Electronics vs. Heungkuk Metaltech CoLtd |
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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