Correlation Between INNOX Advanced and Sungmoon Electronics
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Sungmoon 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 INNOX Advanced and Sungmoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and Sungmoon Electronics Co, you can compare the effects of market volatilities on INNOX Advanced and Sungmoon 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 INNOX Advanced with a short position of Sungmoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Sungmoon Electronics.
Diversification Opportunities for INNOX Advanced and Sungmoon Electronics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INNOX and Sungmoon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Sungmoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungmoon Electronics and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with Sungmoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungmoon Electronics has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Sungmoon Electronics go up and down completely randomly.
Pair Corralation between INNOX Advanced and Sungmoon Electronics
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 0.78 times more return on investment than Sungmoon Electronics. However, INNOX Advanced Materials is 1.29 times less risky than Sungmoon Electronics. It trades about -0.01 of its potential returns per unit of risk. Sungmoon Electronics Co is currently generating about -0.02 per unit of risk. If you would invest 3,199,646 in INNOX Advanced Materials on August 31, 2024 and sell it today you would lose (974,646) from holding INNOX Advanced Materials or give up 30.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Sungmoon Electronics Co
Performance |
| Timeline |
| INNOX Advanced Materials |
| Sungmoon Electronics |
INNOX Advanced and Sungmoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Sungmoon Electronics
The main advantage of trading using opposite INNOX Advanced and Sungmoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, Sungmoon 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 Sungmoon Electronics will offset losses from the drop in Sungmoon Electronics' long position.| INNOX Advanced vs. SK Hynix | INNOX Advanced vs. LX Semicon Co | INNOX Advanced vs. Tokai Carbon Korea | INNOX Advanced vs. People Technology |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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