Correlation Between ECSTELECOM and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM and Sungchang Autotech 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 ECSTELECOM and Sungchang Autotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and Sungchang Autotech Co, you can compare the effects of market volatilities on ECSTELECOM and Sungchang Autotech 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 ECSTELECOM with a short position of Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and Sungchang Autotech.
Diversification Opportunities for ECSTELECOM and Sungchang Autotech
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ECSTELECOM and Sungchang is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech and ECSTELECOM 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 ECSTELECOM Co are associated (or correlated) with Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and Sungchang Autotech go up and down completely randomly.
Pair Corralation between ECSTELECOM and Sungchang Autotech
Assuming the 90 days trading horizon ECSTELECOM Co is expected to generate 0.46 times more return on investment than Sungchang Autotech. However, ECSTELECOM Co is 2.2 times less risky than Sungchang Autotech. It trades about -0.22 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about -0.25 per unit of risk. If you would invest 304,500 in ECSTELECOM Co on September 2, 2024 and sell it today you would lose (17,500) from holding ECSTELECOM Co or give up 5.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. Sungchang Autotech Co
Performance |
| Timeline |
| ECSTELECOM |
| Sungchang Autotech |
ECSTELECOM and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and Sungchang Autotech
The main advantage of trading using opposite ECSTELECOM and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. Finebesteel |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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