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
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungmoon and Wooyang is 0.7. 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. In addition to that, Sungmoon Electronics is 1.55 times more volatile than Wooyang Co. It trades about -0.05 of its total potential returns per unit of risk. Wooyang Co is currently generating about -0.01 per unit of volatility. If you would invest 336,500 in Wooyang Co on September 19, 2024 and sell it today you would lose (7,000) from holding Wooyang Co or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| 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. Solution Advanced Technology | Sungmoon Electronics vs. Busan Industrial Co | Sungmoon Electronics vs. Busan Ind | Sungmoon Electronics vs. Sam Chun Dang |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |