Correlation Between SP Systems and CS BEARING
Can any of the company-specific risk be diversified away by investing in both SP Systems and CS BEARING 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 SP Systems and CS BEARING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Systems CoLtd and CS BEARING CoLtd, you can compare the effects of market volatilities on SP Systems and CS BEARING 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 SP Systems with a short position of CS BEARING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Systems and CS BEARING.
Diversification Opportunities for SP Systems and CS BEARING
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 317830 and 297090 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SP Systems CoLtd and CS BEARING CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS BEARING CoLtd and SP Systems 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 SP Systems CoLtd are associated (or correlated) with CS BEARING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS BEARING CoLtd has no effect on the direction of SP Systems i.e., SP Systems and CS BEARING go up and down completely randomly.
Pair Corralation between SP Systems and CS BEARING
Assuming the 90 days trading horizon SP Systems CoLtd is expected to generate 1.3 times more return on investment than CS BEARING. However, SP Systems is 1.3 times more volatile than CS BEARING CoLtd. It trades about 0.0 of its potential returns per unit of risk. CS BEARING CoLtd is currently generating about -0.02 per unit of risk. If you would invest 797,000 in SP Systems CoLtd on August 29, 2024 and sell it today you would lose (306,000) from holding SP Systems CoLtd or give up 38.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP Systems CoLtd vs. CS BEARING CoLtd
Performance |
| Timeline |
| SP Systems CoLtd |
| CS BEARING CoLtd |
SP Systems and CS BEARING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Systems and CS BEARING
The main advantage of trading using opposite SP Systems and CS BEARING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Systems position performs unexpectedly, CS BEARING 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 CS BEARING will offset losses from the drop in CS BEARING's long position.| SP Systems vs. Lotte Chilsung Beverage | SP Systems vs. ABCO Electronics Co | SP Systems vs. DAEDUCK ELECTRONICS CoLtd | SP Systems vs. Sungwoo Electronics Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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