Correlation Between Sungwoo Electronics and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both Sungwoo Electronics and ABCO 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 Sungwoo Electronics and ABCO Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungwoo Electronics Co and ABCO Electronics Co, you can compare the effects of market volatilities on Sungwoo Electronics and ABCO 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 Sungwoo Electronics with a short position of ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungwoo Electronics and ABCO Electronics.
Diversification Opportunities for Sungwoo Electronics and ABCO Electronics
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sungwoo and ABCO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sungwoo Electronics Co and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics and Sungwoo Electronics 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 Sungwoo Electronics Co are associated (or correlated) with ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of Sungwoo Electronics i.e., Sungwoo Electronics and ABCO Electronics go up and down completely randomly.
Pair Corralation between Sungwoo Electronics and ABCO Electronics
Assuming the 90 days trading horizon Sungwoo Electronics Co is expected to under-perform the ABCO Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Sungwoo Electronics Co is 1.18 times less risky than ABCO Electronics. The stock trades about -0.3 of its potential returns per unit of risk. The ABCO Electronics Co is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 524,000 in ABCO Electronics Co on September 1, 2024 and sell it today you would lose (74,000) from holding ABCO Electronics Co or give up 14.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungwoo Electronics Co vs. ABCO Electronics Co
Performance |
| Timeline |
| Sungwoo Electronics |
| ABCO Electronics |
Sungwoo Electronics and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungwoo Electronics and ABCO Electronics
The main advantage of trading using opposite Sungwoo Electronics and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungwoo Electronics position performs unexpectedly, ABCO 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' long position.| Sungwoo Electronics vs. AptaBio Therapeutics | Sungwoo Electronics vs. Daewoo SBI SPAC | Sungwoo Electronics vs. Dream Security co | Sungwoo Electronics vs. Microfriend |
| ABCO Electronics vs. Dongsin Engineering Construction | ABCO Electronics vs. Doosan Fuel Cell | ABCO Electronics vs. Daishin Balance 1 | ABCO Electronics vs. Total Soft Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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