Correlation Between Sungmoon Electronics and Heerim Architects
Can any of the company-specific risk be diversified away by investing in both Sungmoon Electronics and Heerim Architects 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 Heerim Architects 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 Heerim Architects Planners, you can compare the effects of market volatilities on Sungmoon Electronics and Heerim Architects 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 Heerim Architects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungmoon Electronics and Heerim Architects.
Diversification Opportunities for Sungmoon Electronics and Heerim Architects
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sungmoon and Heerim is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sungmoon Electronics Co and Heerim Architects Planners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heerim Architects 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 Heerim Architects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heerim Architects has no effect on the direction of Sungmoon Electronics i.e., Sungmoon Electronics and Heerim Architects go up and down completely randomly.
Pair Corralation between Sungmoon Electronics and Heerim Architects
Assuming the 90 days trading horizon Sungmoon Electronics Co is expected to under-perform the Heerim Architects. But the stock apears to be less risky and, when comparing its historical volatility, Sungmoon Electronics Co is 1.04 times less risky than Heerim Architects. The stock trades about -0.04 of its potential returns per unit of risk. The Heerim Architects Planners is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 757,097 in Heerim Architects Planners on September 14, 2024 and sell it today you would lose (260,097) from holding Heerim Architects Planners or give up 34.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Sungmoon Electronics Co vs. Heerim Architects Planners
Performance |
| Timeline |
| Sungmoon Electronics |
| Heerim Architects |
Sungmoon Electronics and Heerim Architects Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungmoon Electronics and Heerim Architects
The main advantage of trading using opposite Sungmoon Electronics and Heerim Architects positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungmoon Electronics position performs unexpectedly, Heerim Architects 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 Heerim Architects will offset losses from the drop in Heerim Architects' long position.| Sungmoon Electronics vs. DAEDUCK ELECTRONICS CoLtd | Sungmoon Electronics vs. Iljin Display | Sungmoon Electronics vs. Solution Advanced Technology | Sungmoon Electronics vs. Busan Industrial Co |
| Heerim Architects vs. Sungmoon Electronics Co | Heerim Architects vs. Daejung Chemicals Metals | Heerim Architects vs. Miwon Chemicals Co | Heerim Architects vs. LG Chemicals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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