Correlation Between DeviceENGCOLtd and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both DeviceENGCOLtd and Solution Advanced 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 DeviceENGCOLtd and Solution Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DeviceENGCOLtd and Solution Advanced Technology, you can compare the effects of market volatilities on DeviceENGCOLtd and Solution Advanced 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 DeviceENGCOLtd with a short position of Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of DeviceENGCOLtd and Solution Advanced.
Diversification Opportunities for DeviceENGCOLtd and Solution Advanced
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DeviceENGCOLtd and Solution is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding DeviceENGCOLtd and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced and DeviceENGCOLtd 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 DeviceENGCOLtd are associated (or correlated) with Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of DeviceENGCOLtd i.e., DeviceENGCOLtd and Solution Advanced go up and down completely randomly.
Pair Corralation between DeviceENGCOLtd and Solution Advanced
Assuming the 90 days trading horizon DeviceENGCOLtd is expected to under-perform the Solution Advanced. But the stock apears to be less risky and, when comparing its historical volatility, DeviceENGCOLtd is 1.39 times less risky than Solution Advanced. The stock trades about -0.08 of its potential returns per unit of risk. The Solution Advanced Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 136,900 in Solution Advanced Technology on September 13, 2024 and sell it today you would earn a total of 4,500 from holding Solution Advanced Technology or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DeviceENGCOLtd vs. Solution Advanced Technology
Performance |
| Timeline |
| DeviceENGCOLtd |
| Solution Advanced |
DeviceENGCOLtd and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DeviceENGCOLtd and Solution Advanced
The main advantage of trading using opposite DeviceENGCOLtd and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DeviceENGCOLtd position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| DeviceENGCOLtd vs. KakaoBank Corp | DeviceENGCOLtd vs. Shinhan Financial Group | DeviceENGCOLtd vs. Hana Financial | DeviceENGCOLtd vs. Miwon Chemicals Co |
| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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