Correlation Between SOOSAN INT and Design

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

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

Diversification Opportunities for SOOSAN INT and Design

-0.54

Correlation Coefficient

SOOSAN INT  Design

Excellent diversification

The 3 months correlation between SOOSAN and Design is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding SOOSAN INT Co and Design Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design and SOOSAN INT 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 SOOSAN INT Co are associated (or correlated) with Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design has no effect on the direction of SOOSAN INT i.e., SOOSAN INT and Design go up and down completely randomly.

Pair Corralation between SOOSAN INT and Design

Assuming the 90 days trading horizon SOOSAN INT Co is expected to generate 0.79 times more return on investment than Design. However, SOOSAN INT Co is 1.26 times less risky than Design. It trades about 0.12 of its potential returns per unit of risk. Design Co is currently generating about 0.03 per unit of risk. If you would invest  1,016,000  in SOOSAN INT Co on September 22, 2024 and sell it today you would earn a total of  523,000  from holding SOOSAN INT Co or generate 51.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

SOOSAN INT Co  vs.  Design Co

SOOSAN INT

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOOSAN INT Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SOOSAN INT sustained solid returns over the last few months and may actually be approaching a breakup point.

Design

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Design Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Design sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOOSAN INT and Design

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

The idea behind SOOSAN INT Co and Design 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.