Correlation Between SungMoon Electronics and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both SungMoon Electronics and Busan Industrial 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 SungMoon Electronics and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SungMoon Electronics Co and Busan Industrial Co, you can compare the effects of market volatilities on SungMoon Electronics and Busan Industrial 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 SungMoon Electronics with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SungMoon Electronics and Busan Industrial.
Diversification Opportunities for SungMoon Electronics and Busan Industrial
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SungMoon and Busan is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and SungMoon 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 SungMoon Electronics Co are associated (or correlated) with Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of SungMoon Electronics i.e., SungMoon Electronics and Busan Industrial go up and down completely randomly.
Pair Corralation between SungMoon Electronics and Busan Industrial
Assuming the 90 days trading horizon SungMoon Electronics Co is expected to generate 0.57 times more return on investment than Busan Industrial. However, SungMoon Electronics Co is 1.76 times less risky than Busan Industrial. It trades about 0.27 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.09 per unit of risk. If you would invest 98,500 in SungMoon Electronics Co on October 10, 2024 and sell it today you would earn a total of 13,500 from holding SungMoon Electronics Co or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SungMoon Electronics Co vs. Busan Industrial Co
Performance |
| Timeline |
| SungMoon Electronics |
| Busan Industrial |
SungMoon Electronics and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SungMoon Electronics and Busan Industrial
The main advantage of trading using opposite SungMoon Electronics and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SungMoon Electronics position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| SungMoon Electronics vs. Korea Shipbuilding Offshore | SungMoon Electronics vs. Clean Science co | SungMoon Electronics vs. Foodnamoo | SungMoon Electronics vs. CJ Seafood Corp |
| Busan Industrial vs. KTB Investment Securities | Busan Industrial vs. SBI Investment KOREA | Busan Industrial vs. TS Investment Corp | Busan Industrial vs. Handok Clean Tech |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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