Correlation Between SungMoon Electronics and Sungchang Autotech

Can any of the company-specific risk be diversified away by investing in both SungMoon Electronics and Sungchang Autotech 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 SungMoon Electronics and Sungchang Autotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SungMoon Electronics Co and Sungchang Autotech Co, you can compare the effects of market volatilities on SungMoon Electronics and Sungchang Autotech 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 SungMoon Electronics with a short position of Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SungMoon Electronics and Sungchang Autotech.

Diversification Opportunities for SungMoon Electronics and Sungchang Autotech

0.86

Correlation Coefficient

SungMoon Electronics  Sungchang Autotech

Very poor diversification

The 3 months correlation between SungMoon and Sungchang is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech and SungMoon Electronics 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 SungMoon Electronics Co are associated (or correlated) with Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of SungMoon Electronics i.e., SungMoon Electronics and Sungchang Autotech go up and down completely randomly.

Pair Corralation between SungMoon Electronics and Sungchang Autotech

Assuming the 90 days trading horizon SungMoon Electronics Co is expected to generate 1.19 times more return on investment than Sungchang Autotech. However, SungMoon Electronics is 1.19 times more volatile than Sungchang Autotech Co. It trades about -0.03 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about -0.12 per unit of risk. If you would invest  111,100  in SungMoon Electronics Co on September 27, 2024 and sell it today you would lose (3,000) from holding SungMoon Electronics Co or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

SungMoon Electronics Co  vs.  Sungchang Autotech Co

SungMoon Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SungMoon Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sungchang Autotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungchang Autotech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SungMoon Electronics and Sungchang Autotech

The main advantage of trading using opposite SungMoon Electronics and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SungMoon Electronics position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.

The idea behind SungMoon Electronics Co and Sungchang Autotech Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.