Correlation Between SFA Engineering and Soulbrain Holdings
Can any of the company-specific risk be diversified away by investing in both SFA Engineering and Soulbrain Holdings 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 Soulbrain Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Engineering and Soulbrain Holdings Co, you can compare the effects of market volatilities on SFA Engineering and Soulbrain Holdings 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 Soulbrain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Engineering and Soulbrain Holdings.
Diversification Opportunities for SFA Engineering and Soulbrain Holdings
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SFA and Soulbrain is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and Soulbrain Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soulbrain Holdings 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 Soulbrain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soulbrain Holdings has no effect on the direction of SFA Engineering i.e., SFA Engineering and Soulbrain Holdings go up and down completely randomly.
Pair Corralation between SFA Engineering and Soulbrain Holdings
Assuming the 90 days trading horizon SFA Engineering is expected to generate 0.87 times more return on investment than Soulbrain Holdings. However, SFA Engineering is 1.15 times less risky than Soulbrain Holdings. It trades about -0.07 of its potential returns per unit of risk. Soulbrain Holdings Co is currently generating about -0.12 per unit of risk. If you would invest 2,470,000 in SFA Engineering on August 29, 2024 and sell it today you would lose (350,000) from holding SFA Engineering or give up 14.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFA Engineering vs. Soulbrain Holdings Co
Performance |
| Timeline |
| SFA Engineering |
| Soulbrain Holdings |
SFA Engineering and Soulbrain Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Engineering and Soulbrain Holdings
The main advantage of trading using opposite SFA Engineering and Soulbrain Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Engineering position performs unexpectedly, Soulbrain Holdings 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 Soulbrain Holdings will offset losses from the drop in Soulbrain Holdings' long position.| SFA Engineering vs. Daou Data Corp | SFA Engineering vs. Busan Industrial Co | SFA Engineering vs. Busan Ind | SFA Engineering vs. Shinhan WTI Futures |
| Soulbrain Holdings vs. SFA Engineering | Soulbrain Holdings vs. Seoul Semiconductor Co | Soulbrain Holdings vs. Wonik Ips 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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