Correlation Between Haitai Confectionery and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery and Sungdo Engineering 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 Haitai Confectionery and Sungdo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitai Confectionery Foods and Sungdo Engineering Construction, you can compare the effects of market volatilities on Haitai Confectionery and Sungdo Engineering 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 Haitai Confectionery with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and Sungdo Engineering.
Diversification Opportunities for Haitai Confectionery and Sungdo Engineering
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Haitai and Sungdo is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and Haitai Confectionery 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 Haitai Confectionery Foods are associated (or correlated) with Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Haitai Confectionery i.e., Haitai Confectionery and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Haitai Confectionery and Sungdo Engineering
Assuming the 90 days trading horizon Haitai Confectionery is expected to generate 1.83 times less return on investment than Sungdo Engineering. But when comparing it to its historical volatility, Haitai Confectionery Foods is 1.06 times less risky than Sungdo Engineering. It trades about 0.01 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 433,719 in Sungdo Engineering Construction on September 13, 2024 and sell it today you would earn a total of 3,781 from holding Sungdo Engineering Construction or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Haitai Confectionery |
| Sungdo Engineering |
Haitai Confectionery and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and Sungdo Engineering
The main advantage of trading using opposite Haitai Confectionery and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Haitai Confectionery vs. Samsung Electronics Co | Haitai Confectionery vs. Samsung Electronics Co | Haitai Confectionery vs. SK Hynix | Haitai Confectionery vs. POSCO Holdings |
| Sungdo Engineering vs. Hwangkum Steel Technology | Sungdo Engineering vs. Spolytech Co | Sungdo Engineering vs. Vitzro Tech Co | Sungdo Engineering vs. Lion Chemtech Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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