Correlation Between SFA Semicon and Nepes
Can any of the company-specific risk be diversified away by investing in both SFA Semicon and Nepes 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 SFA Semicon and Nepes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Semicon Co and Nepes, you can compare the effects of market volatilities on SFA Semicon and Nepes 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 SFA Semicon with a short position of Nepes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Semicon and Nepes.
Diversification Opportunities for SFA Semicon and Nepes
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SFA and Nepes is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SFA Semicon Co and Nepes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepes and SFA Semicon 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 SFA Semicon Co are associated (or correlated) with Nepes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepes has no effect on the direction of SFA Semicon i.e., SFA Semicon and Nepes go up and down completely randomly.
Pair Corralation between SFA Semicon and Nepes
Assuming the 90 days trading horizon SFA Semicon Co is expected to generate 0.84 times more return on investment than Nepes. However, SFA Semicon Co is 1.18 times less risky than Nepes. It trades about -0.16 of its potential returns per unit of risk. Nepes is currently generating about -0.22 per unit of risk. If you would invest 353,000 in SFA Semicon Co on August 25, 2024 and sell it today you would lose (31,000) from holding SFA Semicon Co or give up 8.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFA Semicon Co vs. Nepes
Performance |
| Timeline |
| SFA Semicon |
| Nepes |
SFA Semicon and Nepes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Semicon and Nepes
The main advantage of trading using opposite SFA Semicon and Nepes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Semicon position performs unexpectedly, Nepes 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 Nepes will offset losses from the drop in Nepes' long position.| SFA Semicon vs. Korea Real Estate | SFA Semicon vs. Korea Ratings Co | SFA Semicon vs. IQuest Co | SFA Semicon vs. Wonbang Tech Co |
| Nepes vs. Dongjin Semichem Co | Nepes vs. SFA Semicon Co | Nepes vs. Seoul Semiconductor Co | Nepes vs. EO Technics 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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