Correlation Between A Tech and SK Bioscience
Can any of the company-specific risk be diversified away by investing in both A Tech and SK Bioscience 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 A Tech and SK Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Tech Solution Co and SK Bioscience Co, you can compare the effects of market volatilities on A Tech and SK Bioscience 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 A Tech with a short position of SK Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of A Tech and SK Bioscience.
Diversification Opportunities for A Tech and SK Bioscience
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 071670 and 302440 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience and A Tech 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 A Tech Solution Co are associated (or correlated) with SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of A Tech i.e., A Tech and SK Bioscience go up and down completely randomly.
Pair Corralation between A Tech and SK Bioscience
Assuming the 90 days trading horizon A Tech Solution Co is expected to under-perform the SK Bioscience. In addition to that, A Tech is 1.09 times more volatile than SK Bioscience Co. It trades about -0.07 of its total potential returns per unit of risk. SK Bioscience Co is currently generating about -0.04 per unit of volatility. If you would invest 7,660,000 in SK Bioscience Co on August 28, 2024 and sell it today you would lose (2,665,000) from holding SK Bioscience Co or give up 34.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
A Tech Solution Co vs. SK Bioscience Co
Performance |
| Timeline |
| A Tech Solution |
| SK Bioscience |
A Tech and SK Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A Tech and SK Bioscience
The main advantage of trading using opposite A Tech and SK Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Tech position performs unexpectedly, SK Bioscience 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 SK Bioscience will offset losses from the drop in SK Bioscience's long position.| A Tech vs. Daedong Metals Co | A Tech vs. Hanjin Transportation Co | A Tech vs. LG Chemicals | A Tech vs. Nable Communications |
| SK Bioscience vs. Hankukpackage Co | SK Bioscience vs. Tae Kyung Chemical | SK Bioscience vs. Formetal Co | SK Bioscience vs. Daedong Metals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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