Correlation Between ECSTELECOM and Sungwoo Electronics
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM and Sungwoo Electronics 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 Sungwoo Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and Sungwoo Electronics Co, you can compare the effects of market volatilities on ECSTELECOM and Sungwoo Electronics 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 Sungwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and Sungwoo Electronics.
Diversification Opportunities for ECSTELECOM and Sungwoo Electronics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ECSTELECOM and Sungwoo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics 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 Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and Sungwoo Electronics go up and down completely randomly.
Pair Corralation between ECSTELECOM and Sungwoo Electronics
Assuming the 90 days trading horizon ECSTELECOM Co is expected to under-perform the Sungwoo Electronics. But the stock apears to be less risky and, when comparing its historical volatility, ECSTELECOM Co is 1.45 times less risky than Sungwoo Electronics. The stock trades about -0.01 of its potential returns per unit of risk. The Sungwoo Electronics Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 266,416 in Sungwoo Electronics Co on September 12, 2024 and sell it today you would earn a total of 74,584 from holding Sungwoo Electronics Co or generate 28.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.63% |
| Values | Daily Returns |
ECSTELECOM Co vs. Sungwoo Electronics Co
Performance |
| Timeline |
| ECSTELECOM |
| Sungwoo Electronics |
ECSTELECOM and Sungwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and Sungwoo Electronics
The main advantage of trading using opposite ECSTELECOM and Sungwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM position performs unexpectedly, Sungwoo Electronics 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 Sungwoo Electronics will offset losses from the drop in Sungwoo Electronics' long position.| ECSTELECOM vs. Solution Advanced Technology | ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Sam Chun Dang |
| Sungwoo Electronics vs. Samsung Electronics Co | Sungwoo Electronics vs. KyungIn Electronics Co | Sungwoo Electronics vs. Ssangyong Information Communication | Sungwoo Electronics vs. Anam 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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