Correlation Between YOUNGHWA TECH and Sungwoo Electronics
Can any of the company-specific risk be diversified away by investing in both YOUNGHWA TECH and Sungwoo Electronics 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 YOUNGHWA TECH and Sungwoo Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YOUNGHWA TECH Co and Sungwoo Electronics Co, you can compare the effects of market volatilities on YOUNGHWA TECH and Sungwoo Electronics 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 YOUNGHWA TECH with a short position of Sungwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of YOUNGHWA TECH and Sungwoo Electronics.
Diversification Opportunities for YOUNGHWA TECH and Sungwoo Electronics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YOUNGHWA and Sungwoo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding YOUNGHWA TECH Co and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics and YOUNGHWA TECH 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 YOUNGHWA TECH Co are associated (or correlated) with Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of YOUNGHWA TECH i.e., YOUNGHWA TECH and Sungwoo Electronics go up and down completely randomly.
Pair Corralation between YOUNGHWA TECH and Sungwoo Electronics
Assuming the 90 days trading horizon YOUNGHWA TECH Co is expected to generate 1.0 times more return on investment than Sungwoo Electronics. However, YOUNGHWA TECH Co is 1.0 times less risky than Sungwoo Electronics. It trades about -0.25 of its potential returns per unit of risk. Sungwoo Electronics Co is currently generating about -0.41 per unit of risk. If you would invest 815,000 in YOUNGHWA TECH Co on September 12, 2024 and sell it today you would lose (145,000) from holding YOUNGHWA TECH Co or give up 17.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YOUNGHWA TECH Co vs. Sungwoo Electronics Co
Performance |
| Timeline |
| YOUNGHWA TECH |
| Sungwoo Electronics |
YOUNGHWA TECH and Sungwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YOUNGHWA TECH and Sungwoo Electronics
The main advantage of trading using opposite YOUNGHWA TECH and Sungwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YOUNGHWA TECH position performs unexpectedly, Sungwoo Electronics 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 Sungwoo Electronics will offset losses from the drop in Sungwoo Electronics' long position.| YOUNGHWA TECH vs. Ecocab Co | YOUNGHWA TECH vs. Daedong Gear Co | YOUNGHWA TECH vs. Daedong Metals Co | YOUNGHWA TECH vs. Solution Advanced Technology |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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