Correlation Between Korea New and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Korea New and Sungdo 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 Korea New and Sungdo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Sungdo Engineering Construction, you can compare the effects of market volatilities on Korea New and Sungdo 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 Korea New with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Sungdo Engineering.
Diversification Opportunities for Korea New and Sungdo Engineering
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Sungdo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and Korea New 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 Korea New Network are associated (or correlated) with Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Korea New i.e., Korea New and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Korea New and Sungdo Engineering
Assuming the 90 days trading horizon Korea New Network is expected to generate 0.71 times more return on investment than Sungdo Engineering. However, Korea New Network is 1.41 times less risky than Sungdo Engineering. It trades about -0.12 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about -0.15 per unit of risk. If you would invest 81,300 in Korea New Network on September 3, 2024 and sell it today you would lose (4,200) from holding Korea New Network or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Korea New Network |
| Sungdo Engineering |
Korea New and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Sungdo Engineering
The main advantage of trading using opposite Korea New and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Sungdo 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Korea New vs. Daejoo Electronic Materials | Korea New vs. Lake Materials Co | Korea New vs. Lotte Energy Materials | Korea New vs. EV Advanced Material |
| Sungdo Engineering vs. LG Display | Sungdo Engineering vs. Hyundai Motor | Sungdo Engineering vs. Hyundai Motor Co | Sungdo Engineering vs. Hyundai Motor 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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