Correlation Between Korea Zinc and Sungmoon Electronics
Can any of the company-specific risk be diversified away by investing in both Korea Zinc 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 Zinc 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 Zinc and Sungmoon Electronics Co, you can compare the effects of market volatilities on Korea Zinc 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 Zinc with a short position of Sungmoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Zinc and Sungmoon Electronics.
Diversification Opportunities for Korea Zinc and Sungmoon Electronics
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Sungmoon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc 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 Zinc 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 Zinc 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 Zinc i.e., Korea Zinc and Sungmoon Electronics go up and down completely randomly.
Pair Corralation between Korea Zinc and Sungmoon Electronics
Assuming the 90 days trading horizon Korea Zinc is expected to generate 1.29 times more return on investment than Sungmoon Electronics. However, Korea Zinc is 1.29 times more volatile than Sungmoon Electronics Co. It trades about 0.01 of its potential returns per unit of risk. Sungmoon Electronics Co is currently generating about -0.21 per unit of risk. If you would invest 99,800,000 in Korea Zinc on September 1, 2024 and sell it today you would earn a total of 200,000 from holding Korea Zinc or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Zinc vs. Sungmoon Electronics Co
Performance |
| Timeline |
| Korea Zinc |
| Sungmoon Electronics |
Korea Zinc and Sungmoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Zinc and Sungmoon Electronics
The main advantage of trading using opposite Korea Zinc and Sungmoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Zinc 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 Zinc vs. SK Chemicals Co | Korea Zinc vs. PJ Electronics Co | Korea Zinc vs. Hannong Chemicals | Korea Zinc vs. Daeduck Electronics Co |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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