Correlation Between Sungdo Engineering and Ajusteel
Can any of the company-specific risk be diversified away by investing in both Sungdo Engineering and Ajusteel 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 Sungdo Engineering and Ajusteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungdo Engineering Construction and Ajusteel Co, you can compare the effects of market volatilities on Sungdo Engineering and Ajusteel 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 Sungdo Engineering with a short position of Ajusteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungdo Engineering and Ajusteel.
Diversification Opportunities for Sungdo Engineering and Ajusteel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungdo and Ajusteel is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio and Ajusteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajusteel and Sungdo Engineering 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 Sungdo Engineering Construction are associated (or correlated) with Ajusteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajusteel has no effect on the direction of Sungdo Engineering i.e., Sungdo Engineering and Ajusteel go up and down completely randomly.
Pair Corralation between Sungdo Engineering and Ajusteel
Assuming the 90 days trading horizon Sungdo Engineering Construction is expected to generate 1.34 times more return on investment than Ajusteel. However, Sungdo Engineering is 1.34 times more volatile than Ajusteel Co. It trades about -0.15 of its potential returns per unit of risk. Ajusteel Co is currently generating about -0.41 per unit of risk. If you would invest 472,500 in Sungdo Engineering Construction on September 3, 2024 and sell it today you would lose (42,500) from holding Sungdo Engineering Construction or give up 8.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungdo Engineering Constructio vs. Ajusteel Co
Performance |
| Timeline |
| Sungdo Engineering |
| Ajusteel |
Sungdo Engineering and Ajusteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungdo Engineering and Ajusteel
The main advantage of trading using opposite Sungdo Engineering and Ajusteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungdo Engineering position performs unexpectedly, Ajusteel 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 Ajusteel will offset losses from the drop in Ajusteel's long position.| Sungdo Engineering vs. LG Display | Sungdo Engineering vs. Hyundai Motor | Sungdo Engineering vs. Hyundai Motor Co | Sungdo Engineering vs. Hyundai Motor Co |
| Ajusteel vs. Seah Steel Corp | Ajusteel vs. Ni Steel | Ajusteel vs. Korea Steel Co | Ajusteel vs. Bookook Steel |
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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