Correlation Between Ssangyong Information and Microfriend
Can any of the company-specific risk be diversified away by investing in both Ssangyong Information and Microfriend 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 Ssangyong Information and Microfriend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Information Communication and Microfriend, you can compare the effects of market volatilities on Ssangyong Information and Microfriend 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 Ssangyong Information with a short position of Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and Microfriend.
Diversification Opportunities for Ssangyong Information and Microfriend
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ssangyong and Microfriend is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend and Ssangyong Information 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 Ssangyong Information Communication are associated (or correlated) with Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Microfriend go up and down completely randomly.
Pair Corralation between Ssangyong Information and Microfriend
Assuming the 90 days trading horizon Ssangyong Information Communication is expected to generate 0.38 times more return on investment than Microfriend. However, Ssangyong Information Communication is 2.65 times less risky than Microfriend. It trades about -0.19 of its potential returns per unit of risk. Microfriend is currently generating about -0.18 per unit of risk. If you would invest 65,300 in Ssangyong Information Communication on November 3, 2024 and sell it today you would lose (2,100) from holding Ssangyong Information Communication or give up 3.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Information Communic vs. Microfriend
Performance |
| Timeline |
| Ssangyong Information |
| Microfriend |
Ssangyong Information and Microfriend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Information and Microfriend
The main advantage of trading using opposite Ssangyong Information and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Information position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend's long position.The idea behind Ssangyong Information Communication and Microfriend pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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