Correlation Between Sungmoon Electronics and Xavis
Can any of the company-specific risk be diversified away by investing in both Sungmoon Electronics and Xavis 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 Xavis 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 Xavis Co, you can compare the effects of market volatilities on Sungmoon Electronics and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungmoon Electronics and Xavis.
Diversification Opportunities for Sungmoon Electronics and Xavis
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungmoon and Xavis is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sungmoon Electronics Co and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Sungmoon Electronics i.e., Sungmoon Electronics and Xavis go up and down completely randomly.
Pair Corralation between Sungmoon Electronics and Xavis
Assuming the 90 days trading horizon Sungmoon Electronics is expected to generate 1.49 times less return on investment than Xavis. In addition to that, Sungmoon Electronics is 2.17 times more volatile than Xavis Co. It trades about 0.05 of its total potential returns per unit of risk. Xavis Co is currently generating about 0.15 per unit of volatility. If you would invest 129,100 in Xavis Co on October 23, 2024 and sell it today you would earn a total of 5,700 from holding Xavis Co or generate 4.42% 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. Xavis Co
Performance |
| Timeline |
| Sungmoon Electronics |
| Xavis |
Sungmoon Electronics and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungmoon Electronics and Xavis
The main advantage of trading using opposite Sungmoon Electronics and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungmoon Electronics position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' long position.| Sungmoon Electronics vs. Samsung Life Insurance | Sungmoon Electronics vs. Settlebank | Sungmoon Electronics vs. CKH Food Health | Sungmoon Electronics vs. BNK Financial Group |
| Xavis vs. Ecoplastic | Xavis vs. Ssangyong Materials Corp | Xavis vs. Sungmoon Electronics Co | Xavis vs. Top Material 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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