Correlation Between Daewoo SBI and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI 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 Daewoo SBI and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Songwon Industrial Co, you can compare the effects of market volatilities on Daewoo SBI 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 Daewoo SBI with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Songwon Industrial.
Diversification Opportunities for Daewoo SBI and Songwon Industrial
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daewoo and Songwon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Daewoo SBI 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 Daewoo SBI SPAC 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 Daewoo SBI i.e., Daewoo SBI and Songwon Industrial go up and down completely randomly.
Pair Corralation between Daewoo SBI and Songwon Industrial
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Songwon Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.31 times less risky than Songwon Industrial. The stock trades about -0.18 of its potential returns per unit of risk. The Songwon Industrial Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,081,000 in Songwon Industrial Co on November 3, 2024 and sell it today you would earn a total of 159,000 from holding Songwon Industrial Co or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Songwon Industrial Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Songwon Industrial |
Daewoo SBI and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Songwon Industrial
The main advantage of trading using opposite Daewoo SBI and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI 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.| Daewoo SBI vs. Automobile Pc | Daewoo SBI vs. Daejung Chemicals Metals | Daewoo SBI vs. Formetal Co | Daewoo SBI vs. Korea Information Communications |
| Songwon Industrial vs. LEENO Industrial | Songwon Industrial vs. Seoyon Topmetal Co | Songwon Industrial vs. Seoul Food Industrial | Songwon Industrial vs. Hanjoo Light Metal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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