Correlation Between SFA Engineering and Korea Real
Can any of the company-specific risk be diversified away by investing in both SFA Engineering and Korea Real 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 Korea Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Engineering and Korea Real Estate, you can compare the effects of market volatilities on SFA Engineering and Korea Real 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 Korea Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Engineering and Korea Real.
Diversification Opportunities for SFA Engineering and Korea Real
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SFA and Korea is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate 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 Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of SFA Engineering i.e., SFA Engineering and Korea Real go up and down completely randomly.
Pair Corralation between SFA Engineering and Korea Real
Assuming the 90 days trading horizon SFA Engineering is expected to generate 6.12 times more return on investment than Korea Real. However, SFA Engineering is 6.12 times more volatile than Korea Real Estate. It trades about 0.02 of its potential returns per unit of risk. Korea Real Estate is currently generating about -0.02 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFA Engineering vs. Korea Real Estate
Performance |
| Timeline |
| SFA Engineering |
| Korea Real Estate |
SFA Engineering and Korea Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Engineering and Korea Real
The main advantage of trading using opposite SFA Engineering and Korea Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Engineering position performs unexpectedly, Korea Real 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 Korea Real will offset losses from the drop in Korea Real'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 |
| Korea Real vs. KT Submarine Telecom | Korea Real vs. Jb Financial | Korea Real vs. Samsung Life Insurance | Korea Real vs. SK Telecom 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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