Correlation Between Soulbrain Holdings and Taewoong CoLtd
Can any of the company-specific risk be diversified away by investing in both Soulbrain Holdings and Taewoong CoLtd 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 Soulbrain Holdings and Taewoong CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soulbrain Holdings Co and Taewoong CoLtd, you can compare the effects of market volatilities on Soulbrain Holdings and Taewoong CoLtd 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 Soulbrain Holdings with a short position of Taewoong CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soulbrain Holdings and Taewoong CoLtd.
Diversification Opportunities for Soulbrain Holdings and Taewoong CoLtd
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Soulbrain and Taewoong is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Soulbrain Holdings Co and Taewoong CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong CoLtd and Soulbrain Holdings 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 Soulbrain Holdings Co are associated (or correlated) with Taewoong CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong CoLtd has no effect on the direction of Soulbrain Holdings i.e., Soulbrain Holdings and Taewoong CoLtd go up and down completely randomly.
Pair Corralation between Soulbrain Holdings and Taewoong CoLtd
Assuming the 90 days trading horizon Soulbrain Holdings Co is expected to under-perform the Taewoong CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Soulbrain Holdings Co is 1.43 times less risky than Taewoong CoLtd. The stock trades about -0.32 of its potential returns per unit of risk. The Taewoong CoLtd is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 1,511,000 in Taewoong CoLtd on August 28, 2024 and sell it today you would lose (422,000) from holding Taewoong CoLtd or give up 27.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soulbrain Holdings Co vs. Taewoong CoLtd
Performance |
| Timeline |
| Soulbrain Holdings |
| Taewoong CoLtd |
Soulbrain Holdings and Taewoong CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soulbrain Holdings and Taewoong CoLtd
The main advantage of trading using opposite Soulbrain Holdings and Taewoong CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soulbrain Holdings position performs unexpectedly, Taewoong CoLtd 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 Taewoong CoLtd will offset losses from the drop in Taewoong CoLtd's long position.| Soulbrain Holdings vs. LG Chemicals | Soulbrain Holdings vs. Lotte Chemical Corp | Soulbrain Holdings vs. Hyundai Steel | Soulbrain Holdings vs. Seah Steel Corp |
| Taewoong CoLtd vs. Samsung Electronics Co | Taewoong CoLtd vs. Samsung Electronics Co | Taewoong CoLtd vs. LG Energy Solution | Taewoong CoLtd vs. SK Hynix |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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