Correlation Between Cheryong Industrial and Sangsangin Investment
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial 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 Cheryong Industrial and Sangsangin Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Sangsangin Investment Securities, you can compare the effects of market volatilities on Cheryong Industrial 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 Cheryong Industrial with a short position of Sangsangin Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Sangsangin Investment.
Diversification Opportunities for Cheryong Industrial and Sangsangin Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cheryong and Sangsangin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial i.e., Cheryong Industrial and Sangsangin Investment go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Sangsangin Investment
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 4.0 times more return on investment than Sangsangin Investment. However, Cheryong Industrial is 4.0 times more volatile than Sangsangin Investment Securities. It trades about 0.09 of its potential returns per unit of risk. Sangsangin Investment Securities is currently generating about -0.19 per unit of risk. If you would invest 330,566 in Cheryong Industrial CoLtd on October 22, 2024 and sell it today you would earn a total of 370,434 from holding Cheryong Industrial CoLtd or generate 112.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Sangsangin Investment Securiti
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Sangsangin Investment |
Cheryong Industrial and Sangsangin Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Sangsangin Investment
The main advantage of trading using opposite Cheryong Industrial and Sangsangin Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial 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.| Cheryong Industrial vs. Daehan Steel | Cheryong Industrial vs. Fine Besteel Co | Cheryong Industrial vs. Duksan Hi Metal | Cheryong Industrial vs. Hankuk Steel Wire |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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