Correlation Between Sang A and INSUN Environmental
Can any of the company-specific risk be diversified away by investing in both Sang A and INSUN Environmental 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 Sang A and INSUN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sang A Frontec CoLtd and INSUN Environmental New, you can compare the effects of market volatilities on Sang A and INSUN Environmental 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 Sang A with a short position of INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sang A and INSUN Environmental.
Diversification Opportunities for Sang A and INSUN Environmental
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sang and INSUN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sang A Frontec CoLtd and INSUN Environmental New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSUN Environmental New and Sang A 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 Sang A Frontec CoLtd are associated (or correlated) with INSUN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSUN Environmental New has no effect on the direction of Sang A i.e., Sang A and INSUN Environmental go up and down completely randomly.
Pair Corralation between Sang A and INSUN Environmental
Assuming the 90 days trading horizon Sang A Frontec CoLtd is expected to under-perform the INSUN Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Sang A Frontec CoLtd is 1.59 times less risky than INSUN Environmental. The stock trades about -0.11 of its potential returns per unit of risk. The INSUN Environmental New is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 515,000 in INSUN Environmental New on September 28, 2024 and sell it today you would earn a total of 21,000 from holding INSUN Environmental New or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sang A Frontec CoLtd vs. INSUN Environmental New
Performance |
| Timeline |
| Sang A Frontec |
| INSUN Environmental New |
Sang A and INSUN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sang A and INSUN Environmental
The main advantage of trading using opposite Sang A and INSUN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sang A position performs unexpectedly, INSUN Environmental 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 INSUN Environmental will offset losses from the drop in INSUN Environmental's long position.| Sang A vs. Sung Bo Chemicals | Sang A vs. Korea Investment Holdings | Sang A vs. KTB Investment Securities | Sang A vs. Miwon Chemicals Co |
| INSUN Environmental vs. Busan Industrial Co | INSUN Environmental vs. Busan Ind | INSUN Environmental vs. Mirae Asset Daewoo | INSUN Environmental vs. Shinhan WTI Futures |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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