Correlation Between American Funds and Sungmoon Electronics
Can any of the company-specific risk be diversified away by investing in both American Funds and Sungmoon Electronics 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 American Funds and Sungmoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Sungmoon Electronics Co, you can compare the effects of market volatilities on American Funds and Sungmoon Electronics 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 American Funds with a short position of Sungmoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sungmoon Electronics.
Diversification Opportunities for American Funds and Sungmoon Electronics
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Sungmoon is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Sungmoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungmoon Electronics and American Funds 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 American Funds Fundamental are associated (or correlated) with Sungmoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungmoon Electronics has no effect on the direction of American Funds i.e., American Funds and Sungmoon Electronics go up and down completely randomly.
Pair Corralation between American Funds and Sungmoon Electronics
Assuming the 90 days horizon American Funds Fundamental is expected to under-perform the Sungmoon Electronics. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Fundamental is 3.06 times less risky than Sungmoon Electronics. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Sungmoon Electronics Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 490,500 in Sungmoon Electronics Co on October 24, 2024 and sell it today you would lose (2,500) from holding Sungmoon Electronics Co or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.72% |
| Values | Daily Returns |
American Funds Fundamental vs. Sungmoon Electronics Co
Performance |
| Timeline |
| American Funds Funda |
| Sungmoon Electronics |
American Funds and Sungmoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Sungmoon Electronics
The main advantage of trading using opposite American Funds and Sungmoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Sungmoon Electronics 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 Sungmoon Electronics will offset losses from the drop in Sungmoon Electronics' long position.| American Funds vs. Virtus High Yield | American Funds vs. Ab High Income | American Funds vs. Multi Manager High Yield | American Funds vs. Ab High Income |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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