Correlation Between Solution Advanced and DeviceENGCOLtd
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and DeviceENGCOLtd 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 DeviceENGCOLtd 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 DeviceENGCOLtd, you can compare the effects of market volatilities on Solution Advanced and DeviceENGCOLtd 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 DeviceENGCOLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and DeviceENGCOLtd.
Diversification Opportunities for Solution Advanced and DeviceENGCOLtd
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solution and DeviceENGCOLtd is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and DeviceENGCOLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeviceENGCOLtd 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 DeviceENGCOLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeviceENGCOLtd has no effect on the direction of Solution Advanced i.e., Solution Advanced and DeviceENGCOLtd go up and down completely randomly.
Pair Corralation between Solution Advanced and DeviceENGCOLtd
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.4 times more return on investment than DeviceENGCOLtd. However, Solution Advanced is 1.4 times more volatile than DeviceENGCOLtd. It trades about 0.03 of its potential returns per unit of risk. DeviceENGCOLtd is currently generating about -0.04 per unit of risk. If you would invest 139,500 in Solution Advanced Technology on September 14, 2024 and sell it today you would earn a total of 1,900 from holding Solution Advanced Technology or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. DeviceENGCOLtd
Performance |
| Timeline |
| Solution Advanced |
| DeviceENGCOLtd |
Solution Advanced and DeviceENGCOLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and DeviceENGCOLtd
The main advantage of trading using opposite Solution Advanced and DeviceENGCOLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, DeviceENGCOLtd 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 DeviceENGCOLtd will offset losses from the drop in DeviceENGCOLtd'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 |
| DeviceENGCOLtd vs. KakaoBank Corp | DeviceENGCOLtd vs. Shinhan Financial Group | DeviceENGCOLtd vs. Hana Financial | DeviceENGCOLtd vs. Miwon Chemicals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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