Correlation Between Rainbow Robotics and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Rainbow Robotics 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 Rainbow Robotics and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rainbow Robotics and Songwon Industrial Co, you can compare the effects of market volatilities on Rainbow Robotics 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 Rainbow Robotics with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rainbow Robotics and Songwon Industrial.
Diversification Opportunities for Rainbow Robotics and Songwon Industrial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rainbow and Songwon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Rainbow Robotics and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Rainbow Robotics 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 Rainbow Robotics 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 Rainbow Robotics i.e., Rainbow Robotics and Songwon Industrial go up and down completely randomly.
Pair Corralation between Rainbow Robotics and Songwon Industrial
Assuming the 90 days trading horizon Rainbow Robotics is expected to generate 2.16 times more return on investment than Songwon Industrial. However, Rainbow Robotics is 2.16 times more volatile than Songwon Industrial Co. It trades about 0.31 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about 0.04 per unit of risk. If you would invest 29,950,000 in Rainbow Robotics on November 27, 2024 and sell it today you would earn a total of 9,050,000 from holding Rainbow Robotics or generate 30.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rainbow Robotics vs. Songwon Industrial Co
Performance |
| Timeline |
| Rainbow Robotics |
| Songwon Industrial |
Rainbow Robotics and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rainbow Robotics and Songwon Industrial
The main advantage of trading using opposite Rainbow Robotics and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rainbow Robotics 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.| Rainbow Robotics vs. EBEST Investment Securities | Rainbow Robotics vs. SM Entertainment Co | Rainbow Robotics vs. Cube Entertainment | Rainbow Robotics vs. Atinum Investment Co |
| Songwon Industrial vs. Hwangkum Steel Technology | Songwon Industrial vs. Hanwha Life Insurance | Songwon Industrial vs. Hana Technology Co | Songwon Industrial vs. ADTechnology CoLtd |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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