Correlation Between SBI Investment and Ssangyong Information

Can any of the company-specific risk be diversified away by investing in both SBI Investment and Ssangyong Information 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 SBI Investment and Ssangyong Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBI Investment KOREA and Ssangyong Information Communication, you can compare the effects of market volatilities on SBI Investment and Ssangyong Information 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 SBI Investment with a short position of Ssangyong Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Ssangyong Information.

Diversification Opportunities for SBI Investment and Ssangyong Information

0.32

Correlation Coefficient

SBI Investment  Ssangyong Information

Weak diversification

The 3 months correlation between SBI and Ssangyong is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Ssangyong Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Information and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with Ssangyong Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Information has no effect on the direction of SBI Investment i.e., SBI Investment and Ssangyong Information go up and down completely randomly.

Pair Corralation between SBI Investment and Ssangyong Information

Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 2.46 times more return on investment than Ssangyong Information. However, SBI Investment is 2.46 times more volatile than Ssangyong Information Communication. It trades about 0.11 of its potential returns per unit of risk. Ssangyong Information Communication is currently generating about 0.1 per unit of risk. If you would invest  68,600  in SBI Investment KOREA on September 1, 2024 and sell it today you would earn a total of  4,300  from holding SBI Investment KOREA or generate 6.27% return on investment over 90 days.

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

SBI Investment KOREA  vs.  Ssangyong Information Communic

SBI Investment KOREA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBI Investment KOREA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SBI Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssangyong Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ssangyong Information Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ssangyong Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SBI Investment and Ssangyong Information

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

The idea behind SBI Investment KOREA and Ssangyong Information Communication 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.