Correlation Between Sungdo Engineering and Tuksu Engineering

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

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

Diversification Opportunities for Sungdo Engineering and Tuksu Engineering

-0.23

Correlation Coefficient

Sungdo Engineering  Tuksu Engineering

Very good diversification

The 3 months correlation between Sungdo and Tuksu is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio and Tuksu Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuksu Engineering and Sungdo 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 Sungdo Engineering Construction are associated (or correlated) with Tuksu Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuksu Engineering has no effect on the direction of Sungdo Engineering i.e., Sungdo Engineering and Tuksu Engineering go up and down completely randomly.

Pair Corralation between Sungdo Engineering and Tuksu Engineering

Assuming the 90 days trading horizon Sungdo Engineering Construction is expected to under-perform the Tuksu Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Sungdo Engineering Construction is 1.48 times less risky than Tuksu Engineering. The stock trades about -0.08 of its potential returns per unit of risk. The Tuksu Engineering ConstructionLtd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  586,000  in Tuksu Engineering ConstructionLtd on September 4, 2024 and sell it today you would earn a total of  19,000  from holding Tuksu Engineering ConstructionLtd or generate 3.24% return on investment over 90 days.

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

Sungdo Engineering Constructio  vs.  Tuksu Engineering Construction

Sungdo Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungdo Engineering Construction 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.

Tuksu Engineering

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tuksu Engineering ConstructionLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tuksu Engineering may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sungdo Engineering and Tuksu Engineering

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

The idea behind Sungdo Engineering Construction and Tuksu Engineering ConstructionLtd 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.