Correlation Between Songwon Industrial and DataSolution

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Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and DataSolution 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 DataSolution 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 DataSolution, you can compare the effects of market volatilities on Songwon Industrial and DataSolution 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 DataSolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and DataSolution.

Diversification Opportunities for Songwon Industrial and DataSolution

SongwonDataSolutionDiversified AwaySongwonDataSolutionDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Songwon and DataSolution is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and DataSolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DataSolution 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 DataSolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DataSolution has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and DataSolution go up and down completely randomly.

Pair Corralation between Songwon Industrial and DataSolution

Assuming the 90 days trading horizon Songwon Industrial Co is expected to under-perform the DataSolution. But the stock apears to be less risky and, when comparing its historical volatility, Songwon Industrial Co is 1.19 times less risky than DataSolution. The stock trades about -0.07 of its potential returns per unit of risk. The DataSolution is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  488,500  in DataSolution on September 28, 2024 and sell it today you would lose (54,000) from holding DataSolution or give up 11.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Songwon Industrial Co  vs.  DataSolution

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -100102030
JavaScript chart by amCharts 3.21.15004430 263800
       Timeline  
Songwon Industrial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Songwon Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10,00010,50011,00011,50012,00012,50013,00013,500
DataSolution 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DataSolution 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec3,8004,0004,2004,4004,6004,8005,0005,2005,400

Songwon Industrial and DataSolution Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.74-8.04-5.35-2.650.04652.755.548.3311.12 0.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15004430 263800
       Returns  

Pair Trading with Songwon Industrial and DataSolution

The main advantage of trading using opposite Songwon Industrial and DataSolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, DataSolution 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 DataSolution will offset losses from the drop in DataSolution's long position.
The idea behind Songwon Industrial Co and DataSolution 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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