Correlation Between SFA Engineering and Sungwoo Hitech
Can any of the company-specific risk be diversified away by investing in both SFA Engineering and Sungwoo Hitech 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 Engineering and Sungwoo Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Engineering and Sungwoo Hitech Co, you can compare the effects of market volatilities on SFA Engineering and Sungwoo Hitech 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 Engineering with a short position of Sungwoo Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Engineering and Sungwoo Hitech.
Diversification Opportunities for SFA Engineering and Sungwoo Hitech
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SFA and Sungwoo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and Sungwoo Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Hitech and SFA 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 SFA Engineering are associated (or correlated) with Sungwoo Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Hitech has no effect on the direction of SFA Engineering i.e., SFA Engineering and Sungwoo Hitech go up and down completely randomly.
Pair Corralation between SFA Engineering and Sungwoo Hitech
Assuming the 90 days trading horizon SFA Engineering is expected to generate 1.88 times more return on investment than Sungwoo Hitech. However, SFA Engineering is 1.88 times more volatile than Sungwoo Hitech Co. It trades about 0.01 of its potential returns per unit of risk. Sungwoo Hitech Co is currently generating about -0.25 per unit of risk. If you would invest 2,115,000 in SFA Engineering on August 28, 2024 and sell it today you would lose (15,000) from holding SFA Engineering or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SFA Engineering vs. Sungwoo Hitech Co
Performance |
| Timeline |
| SFA Engineering |
| Sungwoo Hitech |
SFA Engineering and Sungwoo Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Engineering and Sungwoo Hitech
The main advantage of trading using opposite SFA Engineering and Sungwoo Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Engineering position performs unexpectedly, Sungwoo Hitech 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 Sungwoo Hitech will offset losses from the drop in Sungwoo Hitech's long position.| SFA Engineering vs. Korea Real Estate | SFA Engineering vs. Korea Ratings Co | SFA Engineering vs. IQuest Co | SFA Engineering vs. Wonbang Tech Co |
| Sungwoo Hitech vs. Soulbrain Holdings Co | Sungwoo Hitech vs. Posco ICT | Sungwoo Hitech vs. SFA Engineering | Sungwoo Hitech vs. Tae Kwang |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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