Correlation Between Solution Advanced and Cheryong Electric
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Cheryong Electric 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 Solution Advanced and Cheryong Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Cheryong Electric CoLtd, you can compare the effects of market volatilities on Solution Advanced and Cheryong Electric 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 Solution Advanced with a short position of Cheryong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Cheryong Electric.
Diversification Opportunities for Solution Advanced and Cheryong Electric
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Cheryong is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Cheryong Electric CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Electric CoLtd and Solution 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 Solution Advanced Technology are associated (or correlated) with Cheryong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Electric CoLtd has no effect on the direction of Solution Advanced i.e., Solution Advanced and Cheryong Electric go up and down completely randomly.
Pair Corralation between Solution Advanced and Cheryong Electric
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Cheryong Electric. But the stock apears to be less risky and, when comparing its historical volatility, Solution Advanced Technology is 1.29 times less risky than Cheryong Electric. The stock trades about -0.02 of its potential returns per unit of risk. The Cheryong Electric CoLtd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,097,132 in Cheryong Electric CoLtd on September 14, 2024 and sell it today you would earn a total of 3,292,868 from holding Cheryong Electric CoLtd or generate 300.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Cheryong Electric CoLtd
Performance |
| Timeline |
| Solution Advanced |
| Cheryong Electric CoLtd |
Solution Advanced and Cheryong Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Cheryong Electric
The main advantage of trading using opposite Solution Advanced and Cheryong Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Cheryong Electric 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 Cheryong Electric will offset losses from the drop in Cheryong Electric's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Cheryong Electric vs. HyVision System | Cheryong Electric vs. Daebo Magnetic CoLtd | Cheryong Electric vs. Vitzro Tech Co | Cheryong Electric vs. Solution Advanced 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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