Correlation Between SFA Engineering and Dongsin Engineering
Can any of the company-specific risk be diversified away by investing in both SFA Engineering and Dongsin Engineering 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 Dongsin Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Engineering and Dongsin Engineering Construction, you can compare the effects of market volatilities on SFA Engineering and Dongsin Engineering 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 Dongsin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Engineering and Dongsin Engineering.
Diversification Opportunities for SFA Engineering and Dongsin Engineering
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SFA and Dongsin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and Dongsin Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsin Engineering 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 Dongsin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsin Engineering has no effect on the direction of SFA Engineering i.e., SFA Engineering and Dongsin Engineering go up and down completely randomly.
Pair Corralation between SFA Engineering and Dongsin Engineering
Assuming the 90 days trading horizon SFA Engineering is expected to generate 0.4 times more return on investment than Dongsin Engineering. However, SFA Engineering is 2.53 times less risky than Dongsin Engineering. It trades about 0.02 of its potential returns per unit of risk. Dongsin Engineering Construction is currently generating about -0.01 per unit of risk. If you would invest 2,075,000 in SFA Engineering on August 31, 2024 and sell it today you would earn a total of 10,000 from holding SFA Engineering or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFA Engineering vs. Dongsin Engineering Constructi
Performance |
| Timeline |
| SFA Engineering |
| Dongsin Engineering |
SFA Engineering and Dongsin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Engineering and Dongsin Engineering
The main advantage of trading using opposite SFA Engineering and Dongsin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Engineering position performs unexpectedly, Dongsin Engineering 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 Dongsin Engineering will offset losses from the drop in Dongsin Engineering's long position.| SFA Engineering vs. Dongsin Engineering Construction | SFA Engineering vs. Doosan Fuel Cell | SFA Engineering vs. Daishin Balance 1 | SFA Engineering vs. Total Soft Bank |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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