Correlation Between Songwon Industrial and Synopex
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Synopex 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 Songwon Industrial and Synopex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Synopex, you can compare the effects of market volatilities on Songwon Industrial and Synopex 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 Songwon Industrial with a short position of Synopex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Synopex.
Diversification Opportunities for Songwon Industrial and Synopex
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Songwon and Synopex is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Synopex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopex and Songwon Industrial 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 Songwon Industrial Co are associated (or correlated) with Synopex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synopex has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Synopex go up and down completely randomly.
Pair Corralation between Songwon Industrial and Synopex
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 0.79 times more return on investment than Synopex. However, Songwon Industrial Co is 1.26 times less risky than Synopex. It trades about -0.01 of its potential returns per unit of risk. Synopex is currently generating about -0.01 per unit of risk. If you would invest 1,249,000 in Songwon Industrial Co on October 21, 2024 and sell it today you would lose (50,000) from holding Songwon Industrial Co or give up 4.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Songwon Industrial Co vs. Synopex
Performance |
Timeline |
Songwon Industrial |
Synopex |
Songwon Industrial and Synopex Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Songwon Industrial and Synopex
The main advantage of trading using opposite Songwon Industrial and Synopex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Synopex 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 Synopex will offset losses from the drop in Synopex's long position.Songwon Industrial vs. Ssangyong Information Communication | ||
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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