Correlation Between SBI Investment and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both SBI Investment and ABCO Electronics 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 SBI Investment and ABCO Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and ABCO Electronics Co, you can compare the effects of market volatilities on SBI Investment and ABCO Electronics 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 SBI Investment with a short position of ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and ABCO Electronics.
Diversification Opportunities for SBI Investment and ABCO Electronics
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBI and ABCO is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of SBI Investment i.e., SBI Investment and ABCO Electronics go up and down completely randomly.
Pair Corralation between SBI Investment and ABCO Electronics
Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 0.85 times more return on investment than ABCO Electronics. However, SBI Investment KOREA is 1.17 times less risky than ABCO Electronics. It trades about -0.03 of its potential returns per unit of risk. ABCO Electronics Co is currently generating about -0.19 per unit of risk. If you would invest 86,900 in SBI Investment KOREA on September 1, 2024 and sell it today you would lose (14,000) from holding SBI Investment KOREA or give up 16.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. ABCO Electronics Co
Performance |
| Timeline |
| SBI Investment KOREA |
| ABCO Electronics |
SBI Investment and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and ABCO Electronics
The main advantage of trading using opposite SBI Investment and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, ABCO Electronics 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' long position.| SBI Investment vs. Ssangyong Information Communication | SBI Investment vs. Sejong Telecom | SBI Investment vs. Wireless Power Amplifier | SBI Investment vs. Daishin Information Communications |
| ABCO Electronics vs. Dongsin Engineering Construction | ABCO Electronics vs. Doosan Fuel Cell | ABCO Electronics vs. Daishin Balance 1 | ABCO Electronics vs. Total Soft Bank |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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