Correlation Between Raontech and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Raontech 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 Raontech and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raontech and Songwon Industrial Co, you can compare the effects of market volatilities on Raontech 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 Raontech with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raontech and Songwon Industrial.
Diversification Opportunities for Raontech and Songwon Industrial
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Raontech and Songwon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Raontech and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Raontech 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 Raontech 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 Raontech i.e., Raontech and Songwon Industrial go up and down completely randomly.
Pair Corralation between Raontech and Songwon Industrial
Assuming the 90 days trading horizon Raontech is expected to generate 1.87 times more return on investment than Songwon Industrial. However, Raontech is 1.87 times more volatile than Songwon Industrial Co. It trades about 0.01 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 542,000 in Raontech on October 12, 2024 and sell it today you would lose (154,500) from holding Raontech or give up 28.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.76% |
| Values | Daily Returns |
Raontech vs. Songwon Industrial Co
Performance |
| Timeline |
| Raontech |
| Songwon Industrial |
Raontech and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raontech and Songwon Industrial
The main advantage of trading using opposite Raontech and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raontech 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.| Raontech vs. Formetal Co | Raontech vs. Hyundai Industrial Co | Raontech vs. Songwon Industrial Co | Raontech vs. Seoul Electronics Telecom |
| Songwon Industrial vs. CU Tech Corp | Songwon Industrial vs. Narae Nanotech Corp | Songwon Industrial vs. Vitzro Tech Co | Songwon Industrial vs. Raontech |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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