Correlation Between Sungwoo Electronics and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both Sungwoo Electronics and ECSTELECOM 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 Sungwoo Electronics and ECSTELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungwoo Electronics Co and ECSTELECOM Co, you can compare the effects of market volatilities on Sungwoo Electronics and ECSTELECOM 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 Sungwoo Electronics with a short position of ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungwoo Electronics and ECSTELECOM.
Diversification Opportunities for Sungwoo Electronics and ECSTELECOM
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sungwoo and ECSTELECOM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sungwoo Electronics Co and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM and Sungwoo 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 Sungwoo Electronics Co are associated (or correlated) with ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Sungwoo Electronics i.e., Sungwoo Electronics and ECSTELECOM go up and down completely randomly.
Pair Corralation between Sungwoo Electronics and ECSTELECOM
Assuming the 90 days trading horizon Sungwoo Electronics Co is expected to under-perform the ECSTELECOM. In addition to that, Sungwoo Electronics is 2.15 times more volatile than ECSTELECOM Co. It trades about -0.03 of its total potential returns per unit of risk. ECSTELECOM Co is currently generating about 0.06 per unit of volatility. If you would invest 277,500 in ECSTELECOM Co on September 12, 2024 and sell it today you would earn a total of 12,500 from holding ECSTELECOM Co or generate 4.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sungwoo Electronics Co vs. ECSTELECOM Co
Performance |
Timeline |
Sungwoo Electronics |
ECSTELECOM |
Sungwoo Electronics and ECSTELECOM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sungwoo Electronics and ECSTELECOM
The main advantage of trading using opposite Sungwoo Electronics and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungwoo Electronics position performs unexpectedly, ECSTELECOM 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 ECSTELECOM will offset losses from the drop in ECSTELECOM's long position.Sungwoo Electronics vs. Samsung Electronics Co | Sungwoo Electronics vs. KyungIn Electronics Co | Sungwoo Electronics vs. Ssangyong Information Communication | Sungwoo Electronics vs. Anam Electronics Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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