Correlation Between Korea Investment and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Korea Investment 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 Investment 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 Investment Holdings and Sungdo Engineering Construction, you can compare the effects of market volatilities on Korea Investment 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 Investment with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Sungdo Engineering.
Diversification Opportunities for Korea Investment and Sungdo Engineering
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Sungdo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings 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 Investment 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 Investment Holdings 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 Investment i.e., Korea Investment and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Korea Investment and Sungdo Engineering
Assuming the 90 days trading horizon Korea Investment Holdings is expected to under-perform the Sungdo Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Korea Investment Holdings is 1.55 times less risky than Sungdo Engineering. The stock trades about -0.09 of its potential returns per unit of risk. The Sungdo Engineering Construction is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 437,500 in Sungdo Engineering Construction on October 12, 2024 and sell it today you would earn a total of 42,500 from holding Sungdo Engineering Construction or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Korea Investment Holdings |
| Sungdo Engineering |
Korea Investment and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Sungdo Engineering
The main advantage of trading using opposite Korea Investment and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment 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 Investment vs. Samsung Electronics Co | Korea Investment vs. Phoenix Materials Co | Korea Investment vs. LS Materials | Korea Investment vs. Daewoo Electronic Components |
| Sungdo Engineering vs. Miwon Chemicals Co | Sungdo Engineering vs. PJ Metal Co | Sungdo Engineering vs. E Investment Development | Sungdo Engineering vs. Korea Investment Holdings |
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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