Correlation Between Microfriend and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Microfriend and Songwon Industrial 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 Microfriend and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Songwon Industrial Co, you can compare the effects of market volatilities on Microfriend and Songwon Industrial 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 Microfriend with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Songwon Industrial.
Diversification Opportunities for Microfriend and Songwon Industrial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Microfriend and Songwon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Microfriend 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 Microfriend are associated (or correlated) with Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Microfriend i.e., Microfriend and Songwon Industrial go up and down completely randomly.
Pair Corralation between Microfriend and Songwon Industrial
Assuming the 90 days trading horizon Microfriend is expected to under-perform the Songwon Industrial. In addition to that, Microfriend is 1.87 times more volatile than Songwon Industrial Co. It trades about -0.06 of its total potential returns per unit of risk. Songwon Industrial Co is currently generating about -0.06 per unit of volatility. If you would invest 1,559,000 in Songwon Industrial Co on August 29, 2024 and sell it today you would lose (454,000) from holding Songwon Industrial Co or give up 29.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. Songwon Industrial Co
Performance |
| Timeline |
| Microfriend |
| Songwon Industrial |
Microfriend and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Songwon Industrial
The main advantage of trading using opposite Microfriend and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| Microfriend vs. SK Hynix | Microfriend vs. LX Semicon Co | Microfriend vs. Tokai Carbon Korea | Microfriend vs. People Technology |
| Songwon Industrial vs. AptaBio Therapeutics | Songwon Industrial vs. Daewoo SBI SPAC | Songwon Industrial vs. Dream Security co | Songwon Industrial vs. Microfriend |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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