Correlation Between Sungwoo Hitech and SFA Engineering
Can any of the company-specific risk be diversified away by investing in both Sungwoo Hitech and SFA Engineering 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 Sungwoo Hitech and SFA Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungwoo Hitech Co and SFA Engineering, you can compare the effects of market volatilities on Sungwoo Hitech and SFA Engineering 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 Sungwoo Hitech with a short position of SFA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungwoo Hitech and SFA Engineering.
Diversification Opportunities for Sungwoo Hitech and SFA Engineering
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sungwoo and SFA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sungwoo Hitech Co and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering and Sungwoo Hitech 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 Sungwoo Hitech Co are associated (or correlated) with SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of Sungwoo Hitech i.e., Sungwoo Hitech and SFA Engineering go up and down completely randomly.
Pair Corralation between Sungwoo Hitech and SFA Engineering
Assuming the 90 days trading horizon Sungwoo Hitech Co is expected to under-perform the SFA Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Sungwoo Hitech Co is 1.88 times less risky than SFA Engineering. The stock trades about -0.25 of its potential returns per unit of risk. The SFA Engineering is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,115,000 in SFA Engineering on August 28, 2024 and sell it today you would lose (15,000) from holding SFA Engineering or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sungwoo Hitech Co vs. SFA Engineering
Performance |
| Timeline |
| Sungwoo Hitech |
| SFA Engineering |
Sungwoo Hitech and SFA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungwoo Hitech and SFA Engineering
The main advantage of trading using opposite Sungwoo Hitech and SFA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungwoo Hitech position performs unexpectedly, SFA Engineering 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 SFA Engineering will offset losses from the drop in SFA Engineering's long position.| Sungwoo Hitech vs. Soulbrain Holdings Co | Sungwoo Hitech vs. Posco ICT | Sungwoo Hitech vs. SFA Engineering | Sungwoo Hitech vs. Tae Kwang |
| SFA Engineering vs. Korea Real Estate | SFA Engineering vs. Korea Ratings Co | SFA Engineering vs. IQuest Co | SFA Engineering vs. Wonbang Tech 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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