Correlation Between Automobile and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both Automobile and Ssangyong Materials 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 Automobile and Ssangyong Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Ssangyong Materials Corp, you can compare the effects of market volatilities on Automobile and Ssangyong Materials 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 Automobile with a short position of Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Ssangyong Materials.
Diversification Opportunities for Automobile and Ssangyong Materials
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Automobile and Ssangyong is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp and Automobile 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 Automobile Pc are associated (or correlated) with Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Automobile i.e., Automobile and Ssangyong Materials go up and down completely randomly.
Pair Corralation between Automobile and Ssangyong Materials
Assuming the 90 days trading horizon Automobile is expected to generate 7.43 times less return on investment than Ssangyong Materials. In addition to that, Automobile is 1.28 times more volatile than Ssangyong Materials Corp. It trades about 0.0 of its total potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.03 per unit of volatility. If you would invest 237,000 in Ssangyong Materials Corp on September 1, 2024 and sell it today you would earn a total of 2,000 from holding Ssangyong Materials Corp or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Ssangyong Materials Corp
Performance |
| Timeline |
| Automobile Pc |
| Ssangyong Materials Corp |
Automobile and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Ssangyong Materials
The main advantage of trading using opposite Automobile and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.| Automobile vs. Miwon Chemical | Automobile vs. Sung Bo Chemicals | Automobile vs. Chin Yang Chemical | Automobile vs. Daehan Synthetic Fiber |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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