Correlation Between NewFlex Technology and SungMoon Electronics
Can any of the company-specific risk be diversified away by investing in both NewFlex Technology and SungMoon 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 NewFlex Technology and SungMoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewFlex Technology Co and SungMoon Electronics Co, you can compare the effects of market volatilities on NewFlex Technology and SungMoon 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 NewFlex Technology with a short position of SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFlex Technology and SungMoon Electronics.
Diversification Opportunities for NewFlex Technology and SungMoon Electronics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NewFlex and SungMoon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon Electronics and NewFlex Technology 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 NewFlex Technology Co are associated (or correlated) with SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and SungMoon Electronics go up and down completely randomly.
Pair Corralation between NewFlex Technology and SungMoon Electronics
Assuming the 90 days trading horizon NewFlex Technology Co is expected to under-perform the SungMoon Electronics. In addition to that, NewFlex Technology is 1.73 times more volatile than SungMoon Electronics Co. It trades about -0.27 of its total potential returns per unit of risk. SungMoon Electronics Co is currently generating about -0.41 per unit of volatility. If you would invest 125,800 in SungMoon Electronics Co on August 25, 2024 and sell it today you would lose (14,600) from holding SungMoon Electronics Co or give up 11.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewFlex Technology Co vs. SungMoon Electronics Co
Performance |
| Timeline |
| NewFlex Technology |
| SungMoon Electronics |
NewFlex Technology and SungMoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewFlex Technology and SungMoon Electronics
The main advantage of trading using opposite NewFlex Technology and SungMoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewFlex Technology position performs unexpectedly, SungMoon 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 SungMoon Electronics will offset losses from the drop in SungMoon Electronics' long position.| NewFlex Technology vs. Korean Reinsurance Co | NewFlex Technology vs. InfoBank | NewFlex Technology vs. DB Financial Investment | NewFlex Technology vs. Jeju Bank |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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