Correlation Between Sungwoo Electronics and ED Co
Can any of the company-specific risk be diversified away by investing in both Sungwoo Electronics and ED Co 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 ED Co 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 ED Co, you can compare the effects of market volatilities on Sungwoo Electronics and ED Co 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 ED Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungwoo Electronics and ED Co.
Diversification Opportunities for Sungwoo Electronics and ED Co
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungwoo and 101360 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sungwoo Electronics Co and ED Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED Co 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 ED Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Co has no effect on the direction of Sungwoo Electronics i.e., Sungwoo Electronics and ED Co go up and down completely randomly.
Pair Corralation between Sungwoo Electronics and ED Co
Assuming the 90 days trading horizon Sungwoo Electronics Co is expected to generate 0.82 times more return on investment than ED Co. However, Sungwoo Electronics Co is 1.22 times less risky than ED Co. It trades about -0.37 of its potential returns per unit of risk. ED Co is currently generating about -0.3 per unit of risk. If you would invest 456,500 in Sungwoo Electronics Co on September 13, 2024 and sell it today you would lose (113,500) from holding Sungwoo Electronics Co or give up 24.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sungwoo Electronics Co vs. ED Co
Performance |
| Timeline |
| Sungwoo Electronics |
| ED Co |
Sungwoo Electronics and ED Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungwoo Electronics and ED Co
The main advantage of trading using opposite Sungwoo Electronics and ED Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungwoo Electronics position performs unexpectedly, ED Co 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 ED Co will offset losses from the drop in ED Co's long position.| Sungwoo Electronics vs. Haesung Industrial Co | Sungwoo Electronics vs. Kbi Metal Co | Sungwoo Electronics vs. Histeel | Sungwoo Electronics vs. Wonil Special Steel |
| ED Co vs. SV Investment | ED Co vs. TS Investment Corp | ED Co vs. Jeju Beer Co | ED Co vs. Coloray International Investment |
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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