Correlation Between Choil Aluminum and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Sungchang Autotech 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 Choil Aluminum and Sungchang Autotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Sungchang Autotech Co, you can compare the effects of market volatilities on Choil Aluminum and Sungchang Autotech 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 Choil Aluminum with a short position of Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Sungchang Autotech.
Diversification Opportunities for Choil Aluminum and Sungchang Autotech
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Choil and Sungchang is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Choil Aluminum and Sungchang Autotech
Assuming the 90 days trading horizon Choil Aluminum is expected to under-perform the Sungchang Autotech. But the stock apears to be less risky and, when comparing its historical volatility, Choil Aluminum is 1.21 times less risky than Sungchang Autotech. The stock trades about -0.14 of its potential returns per unit of risk. The Sungchang Autotech Co is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 410,000 in Sungchang Autotech Co on August 28, 2024 and sell it today you would lose (28,500) from holding Sungchang Autotech Co or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Sungchang Autotech Co
Performance |
| Timeline |
| Choil Aluminum |
| Sungchang Autotech |
Choil Aluminum and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Sungchang Autotech
The main advantage of trading using opposite Choil Aluminum and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Choil Aluminum vs. Hankuk Steel Wire | Choil Aluminum vs. Cuckoo Homesys Co | Choil Aluminum vs. Kukdong Oil Chemicals | Choil Aluminum vs. Hanil Iron Steel |
| Sungchang Autotech vs. Busan Industrial Co | Sungchang Autotech vs. Busan Ind | Sungchang Autotech vs. Mirae Asset Daewoo | Sungchang Autotech vs. UNISEM 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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