Correlation Between Sungchang Autotech and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Sungchang Autotech and Korea Computer 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 Sungchang Autotech and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungchang Autotech Co and Korea Computer Terminal, you can compare the effects of market volatilities on Sungchang Autotech and Korea Computer 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 Sungchang Autotech with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungchang Autotech and Korea Computer.
Diversification Opportunities for Sungchang Autotech and Korea Computer
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungchang and Korea is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sungchang Autotech Co and Korea Computer Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Terminal and Sungchang Autotech 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 Sungchang Autotech Co are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Terminal has no effect on the direction of Sungchang Autotech i.e., Sungchang Autotech and Korea Computer go up and down completely randomly.
Pair Corralation between Sungchang Autotech and Korea Computer
Assuming the 90 days trading horizon Sungchang Autotech Co is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Sungchang Autotech Co is 1.92 times less risky than Korea Computer. The stock trades about -0.12 of its potential returns per unit of risk. The Korea Computer Terminal is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 214,500 in Korea Computer Terminal on August 26, 2024 and sell it today you would earn a total of 7,500 from holding Korea Computer Terminal or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungchang Autotech Co vs. Korea Computer Terminal
Performance |
| Timeline |
| Sungchang Autotech |
| Korea Computer Terminal |
Sungchang Autotech and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungchang Autotech and Korea Computer
The main advantage of trading using opposite Sungchang Autotech and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungchang Autotech position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| Sungchang Autotech vs. Busan Industrial Co | Sungchang Autotech vs. Busan Ind | Sungchang Autotech vs. Mirae Asset Daewoo | Sungchang Autotech vs. UNISEM Co |
| Korea Computer vs. Eagle Veterinary Technology | Korea Computer vs. DSC Investment | Korea Computer vs. PH Tech Co | Korea Computer vs. Sungchang Autotech 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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