Correlation Between SungMoon Electronics and ASTORY CoLtd
Can any of the company-specific risk be diversified away by investing in both SungMoon Electronics and ASTORY CoLtd 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 ASTORY CoLtd 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 ASTORY CoLtd, you can compare the effects of market volatilities on SungMoon Electronics and ASTORY CoLtd 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 ASTORY CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SungMoon Electronics and ASTORY CoLtd.
Diversification Opportunities for SungMoon Electronics and ASTORY CoLtd
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SungMoon and ASTORY is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd 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 ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of SungMoon Electronics i.e., SungMoon Electronics and ASTORY CoLtd go up and down completely randomly.
Pair Corralation between SungMoon Electronics and ASTORY CoLtd
Assuming the 90 days trading horizon SungMoon Electronics Co is expected to generate 0.7 times more return on investment than ASTORY CoLtd. However, SungMoon Electronics Co is 1.43 times less risky than ASTORY CoLtd. It trades about 0.22 of its potential returns per unit of risk. ASTORY CoLtd is currently generating about -0.28 per unit of risk. If you would invest 110,600 in SungMoon Electronics Co on November 5, 2024 and sell it today you would earn a total of 7,900 from holding SungMoon Electronics Co or generate 7.14% 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. ASTORY CoLtd
Performance |
| Timeline |
| SungMoon Electronics |
| ASTORY CoLtd |
SungMoon Electronics and ASTORY CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SungMoon Electronics and ASTORY CoLtd
The main advantage of trading using opposite SungMoon Electronics and ASTORY CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SungMoon Electronics position performs unexpectedly, ASTORY CoLtd 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 ASTORY CoLtd will offset losses from the drop in ASTORY CoLtd's long position.The idea behind SungMoon Electronics Co and ASTORY CoLtd 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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