Correlation Between JUSUNG ENGINEERING and SFA Engineering

Can any of the company-specific risk be diversified away by investing in both JUSUNG ENGINEERING and SFA Engineering 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 JUSUNG ENGINEERING and SFA Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for JUSUNG ENGINEERING and SFA Engineering

-0.56

Correlation Coefficient

JUSUNG ENGINEERING  SFA Engineering

Excellent diversification

The 3 months correlation between JUSUNG and SFA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding JUSUNG ENGINEERING Co and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering and JUSUNG ENGINEERING 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 JUSUNG ENGINEERING Co are associated (or correlated) with SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of JUSUNG ENGINEERING i.e., JUSUNG ENGINEERING and SFA Engineering go up and down completely randomly.

Pair Corralation between JUSUNG ENGINEERING and SFA Engineering

Assuming the 90 days trading horizon JUSUNG ENGINEERING Co is expected to generate 1.22 times more return on investment than SFA Engineering. However, JUSUNG ENGINEERING is 1.22 times more volatile than SFA Engineering. It trades about 0.06 of its potential returns per unit of risk. SFA Engineering is currently generating about -0.07 per unit of risk. If you would invest  2,525,000  in JUSUNG ENGINEERING Co on September 3, 2024 and sell it today you would earn a total of  265,000  from holding JUSUNG ENGINEERING Co or generate 10.5% return on investment over 90 days.

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

JUSUNG ENGINEERING Co  vs.  SFA Engineering

JUSUNG ENGINEERING

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JUSUNG ENGINEERING Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JUSUNG ENGINEERING sustained solid returns over the last few months and may actually be approaching a breakup point.

SFA Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFA Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with JUSUNG ENGINEERING and SFA Engineering

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

The idea behind JUSUNG ENGINEERING Co and SFA Engineering 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 Commodity Directory module to find actively traded commodities issued by global exchanges.