Correlation Between ENERGYMACHINERY KOREA and Sangsangin Investment
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and Sangsangin Investment 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 ENERGYMACHINERY KOREA and Sangsangin Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and Sangsangin Investment Securities, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and Sangsangin Investment 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 ENERGYMACHINERY KOREA with a short position of Sangsangin Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Sangsangin Investment.
Diversification Opportunities for ENERGYMACHINERY KOREA and Sangsangin Investment
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between ENERGYMACHINERY and Sangsangin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Sangsangin Investment Securiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsangin Investment and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with Sangsangin Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsangin Investment has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Sangsangin Investment go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and Sangsangin Investment
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 1.57 times more return on investment than Sangsangin Investment. However, ENERGYMACHINERY KOREA is 1.57 times more volatile than Sangsangin Investment Securities. It trades about -0.01 of its potential returns per unit of risk. Sangsangin Investment Securities is currently generating about -0.06 per unit of risk. If you would invest 295,500 in ENERGYMACHINERY KOREA CoLtd on November 27, 2024 and sell it today you would lose (78,000) from holding ENERGYMACHINERY KOREA CoLtd or give up 26.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. Sangsangin Investment Securiti
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| Sangsangin Investment |
ENERGYMACHINERY KOREA and Sangsangin Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and Sangsangin Investment
The main advantage of trading using opposite ENERGYMACHINERY KOREA and Sangsangin Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA position performs unexpectedly, Sangsangin Investment 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 Sangsangin Investment will offset losses from the drop in Sangsangin Investment's long position.| ENERGYMACHINERY KOREA vs. Busan Industrial Co | ENERGYMACHINERY KOREA vs. Busan Ind | ENERGYMACHINERY KOREA vs. Mirae Asset Daewoo | ENERGYMACHINERY KOREA vs. UNISEM Co |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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