Correlation Between Song Ho and Coxon Precise
Can any of the company-specific risk be diversified away by investing in both Song Ho and Coxon Precise 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 Song Ho and Coxon Precise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Ho Industrial and Coxon Precise Industrial, you can compare the effects of market volatilities on Song Ho and Coxon Precise 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 Song Ho with a short position of Coxon Precise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Ho and Coxon Precise.
Diversification Opportunities for Song Ho and Coxon Precise
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Song and Coxon is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Song Ho Industrial and Coxon Precise Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coxon Precise Industrial and Song Ho 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 Song Ho Industrial are associated (or correlated) with Coxon Precise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coxon Precise Industrial has no effect on the direction of Song Ho i.e., Song Ho and Coxon Precise go up and down completely randomly.
Pair Corralation between Song Ho and Coxon Precise
Assuming the 90 days trading horizon Song Ho Industrial is expected to generate 0.18 times more return on investment than Coxon Precise. However, Song Ho Industrial is 5.42 times less risky than Coxon Precise. It trades about 0.13 of its potential returns per unit of risk. Coxon Precise Industrial is currently generating about -0.2 per unit of risk. If you would invest 2,740 in Song Ho Industrial on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Song Ho Industrial or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Ho Industrial vs. Coxon Precise Industrial
Performance |
| Timeline |
| Song Ho Industrial |
| Coxon Precise Industrial |
Song Ho and Coxon Precise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Ho and Coxon Precise
The main advantage of trading using opposite Song Ho and Coxon Precise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Ho position performs unexpectedly, Coxon Precise 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 Coxon Precise will offset losses from the drop in Coxon Precise's long position.| Song Ho vs. Synmosa Biopharma | Song Ho vs. Taiwan Glass Ind | Song Ho vs. Tong Tai Machine Tool | Song Ho vs. Oriental Union Chemical |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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