Correlation Between SungMoon Electronics and Wooyang
Can any of the company-specific risk be diversified away by investing in both SungMoon Electronics and Wooyang 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 Wooyang 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 Wooyang Co, you can compare the effects of market volatilities on SungMoon Electronics and Wooyang 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 Wooyang. Check out your portfolio center. Please also check ongoing floating volatility patterns of SungMoon Electronics and Wooyang.
Diversification Opportunities for SungMoon Electronics and Wooyang
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SungMoon and Wooyang is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and Wooyang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wooyang 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 Wooyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wooyang has no effect on the direction of SungMoon Electronics i.e., SungMoon Electronics and Wooyang go up and down completely randomly.
Pair Corralation between SungMoon Electronics and Wooyang
Assuming the 90 days trading horizon SungMoon Electronics Co is expected to under-perform the Wooyang. But the stock apears to be less risky and, when comparing its historical volatility, SungMoon Electronics Co is 1.29 times less risky than Wooyang. The stock trades about -0.01 of its potential returns per unit of risk. The Wooyang Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 288,000 in Wooyang Co on September 19, 2024 and sell it today you would earn a total of 41,500 from holding Wooyang Co or generate 14.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
SungMoon Electronics Co vs. Wooyang Co
Performance |
| Timeline |
| SungMoon Electronics |
| Wooyang |
SungMoon Electronics and Wooyang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SungMoon Electronics and Wooyang
The main advantage of trading using opposite SungMoon Electronics and Wooyang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SungMoon Electronics position performs unexpectedly, Wooyang 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 Wooyang will offset losses from the drop in Wooyang's long position.| SungMoon Electronics vs. Samsung Electronics Co | SungMoon Electronics vs. Samsung Electronics Co | SungMoon Electronics vs. SK Hynix | SungMoon Electronics vs. POSCO Holdings |
| Wooyang vs. SungMoon Electronics Co | Wooyang vs. Sungmoon Electronics Co | Wooyang vs. Shinsegae Information Communication | Wooyang vs. KyungIn Electronics Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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