Correlation Between System and SBI Investment
Can any of the company-specific risk be diversified away by investing in both System and SBI Investment 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 System and SBI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and SBI Investment KOREA, you can compare the effects of market volatilities on System and SBI Investment 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 System with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and SBI Investment.
Diversification Opportunities for System and SBI Investment
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between System and SBI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and System 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 System and Application are associated (or correlated) with SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of System i.e., System and SBI Investment go up and down completely randomly.
Pair Corralation between System and SBI Investment
Assuming the 90 days trading horizon System and Application is expected to generate 1.48 times more return on investment than SBI Investment. However, System is 1.48 times more volatile than SBI Investment KOREA. It trades about 0.23 of its potential returns per unit of risk. SBI Investment KOREA is currently generating about 0.02 per unit of risk. If you would invest 148,177 in System and Application on October 14, 2024 and sell it today you would earn a total of 18,423 from holding System and Application or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. SBI Investment KOREA
Performance |
| Timeline |
| System and Application |
| SBI Investment KOREA |
System and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and SBI Investment
The main advantage of trading using opposite System and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.| System vs. DSC Investment | System vs. SV Investment | System vs. DB Financial Investment | System vs. Korea Air Svc |
| SBI Investment vs. Polaris Office Corp | SBI Investment vs. Anam Electronics Co | SBI Investment vs. System and Application | SBI Investment vs. Daeduck Electronics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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