Correlation Between Sungwoo Electronics and LegoChem Biosciences
Can any of the company-specific risk be diversified away by investing in both Sungwoo Electronics 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 Sungwoo Electronics and LegoChem Biosciences 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 LegoChem Biosciences, you can compare the effects of market volatilities on Sungwoo Electronics 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 Sungwoo Electronics with a short position of LegoChem Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungwoo Electronics and LegoChem Biosciences.
Diversification Opportunities for Sungwoo Electronics and LegoChem Biosciences
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungwoo and LegoChem is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sungwoo Electronics Co and LegoChem Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LegoChem Biosciences 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 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 Sungwoo Electronics i.e., Sungwoo Electronics and LegoChem Biosciences go up and down completely randomly.
Pair Corralation between Sungwoo Electronics and LegoChem Biosciences
Assuming the 90 days trading horizon Sungwoo Electronics Co is expected to generate 0.64 times more return on investment than LegoChem Biosciences. However, Sungwoo Electronics Co is 1.57 times less risky than LegoChem Biosciences. It trades about -0.34 of its potential returns per unit of risk. LegoChem Biosciences is currently generating about -0.28 per unit of risk. If you would invest 454,000 in Sungwoo Electronics Co on September 4, 2024 and sell it today you would lose (87,000) from holding Sungwoo Electronics Co or give up 19.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungwoo Electronics Co vs. LegoChem Biosciences
Performance |
| Timeline |
| Sungwoo Electronics |
| LegoChem Biosciences |
Sungwoo Electronics and LegoChem Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungwoo Electronics and LegoChem Biosciences
The main advantage of trading using opposite Sungwoo Electronics and LegoChem Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungwoo Electronics 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.| Sungwoo Electronics vs. Inzi Display CoLtd | Sungwoo Electronics vs. GS Retail Co | Sungwoo Electronics vs. LG Display Co | Sungwoo Electronics vs. Hannong Chemicals |
| LegoChem Biosciences vs. Sungwoo Electronics Co | LegoChem Biosciences vs. Automobile Pc | LegoChem Biosciences vs. Kukdong Oil Chemicals | LegoChem Biosciences vs. Namhae Chemical |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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