Correlation Between SungMoon Electronics and BGF Retail
Can any of the company-specific risk be diversified away by investing in both SungMoon Electronics and BGF Retail 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 BGF Retail 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 BGF Retail Co, you can compare the effects of market volatilities on SungMoon Electronics and BGF Retail 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 BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of SungMoon Electronics and BGF Retail.
Diversification Opportunities for SungMoon Electronics and BGF Retail
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SungMoon and BGF is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail 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 BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of SungMoon Electronics i.e., SungMoon Electronics and BGF Retail go up and down completely randomly.
Pair Corralation between SungMoon Electronics and BGF Retail
Assuming the 90 days trading horizon SungMoon Electronics Co is expected to generate 1.21 times more return on investment than BGF Retail. However, SungMoon Electronics is 1.21 times more volatile than BGF Retail Co. It trades about 0.18 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.02 per unit of risk. If you would invest 113,300 in SungMoon Electronics Co on October 14, 2024 and sell it today you would earn a total of 7,200 from holding SungMoon Electronics Co or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SungMoon Electronics Co vs. BGF Retail Co
Performance |
| Timeline |
| SungMoon Electronics |
| BGF Retail |
SungMoon Electronics and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SungMoon Electronics and BGF Retail
The main advantage of trading using opposite SungMoon Electronics and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SungMoon Electronics position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.| SungMoon Electronics vs. Youngbo Chemical Co | SungMoon Electronics vs. iNtRON Biotechnology | SungMoon Electronics vs. Daou Technology | SungMoon Electronics vs. Hanil Chemical Ind |
| BGF Retail vs. Seers Technology | BGF Retail vs. Samwha Electronics Co | BGF Retail vs. Bosung Power Technology | BGF Retail vs. SungMoon 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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