Correlation Between Sungchang Autotech and LegoChem Biosciences
Can any of the company-specific risk be diversified away by investing in both Sungchang Autotech and LegoChem Biosciences 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 LegoChem Biosciences 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 LegoChem Biosciences, you can compare the effects of market volatilities on Sungchang Autotech and LegoChem Biosciences 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 LegoChem Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungchang Autotech and LegoChem Biosciences.
Diversification Opportunities for Sungchang Autotech and LegoChem Biosciences
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sungchang and LegoChem is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sungchang Autotech Co and LegoChem Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LegoChem Biosciences 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 LegoChem Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LegoChem Biosciences has no effect on the direction of Sungchang Autotech i.e., Sungchang Autotech and LegoChem Biosciences go up and down completely randomly.
Pair Corralation between Sungchang Autotech and LegoChem Biosciences
Assuming the 90 days trading horizon Sungchang Autotech Co is expected to under-perform the LegoChem Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Sungchang Autotech Co is 2.1 times less risky than LegoChem Biosciences. The stock trades about -0.06 of its potential returns per unit of risk. The LegoChem Biosciences is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,465,000 in LegoChem Biosciences on September 14, 2024 and sell it today you would earn a total of 6,435,000 from holding LegoChem Biosciences or generate 144.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungchang Autotech Co vs. LegoChem Biosciences
Performance |
| Timeline |
| Sungchang Autotech |
| LegoChem Biosciences |
Sungchang Autotech and LegoChem Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungchang Autotech and LegoChem Biosciences
The main advantage of trading using opposite Sungchang Autotech and LegoChem Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungchang Autotech position performs unexpectedly, LegoChem Biosciences 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 LegoChem Biosciences will offset losses from the drop in LegoChem Biosciences' long position.| Sungchang Autotech vs. Daou Data Corp | Sungchang Autotech vs. Solution Advanced Technology | Sungchang Autotech vs. Busan Industrial Co | Sungchang Autotech vs. Busan Ind |
| LegoChem Biosciences vs. Jeong Moon Information | LegoChem Biosciences vs. Ssangyong Information Communication | LegoChem Biosciences vs. Sungchang Autotech Co | LegoChem Biosciences vs. Moadata 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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