Correlation Between GS Engineering and Sungho Electronics

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

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

Diversification Opportunities for GS Engineering and Sungho Electronics

-0.06

Correlation Coefficient

GS Engineering  Sungho Electronics

Good diversification

The 3 months correlation between 006360 and Sungho is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and Sungho Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungho Electronics Corp and GS 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 GS Engineering Construction are associated (or correlated) with Sungho Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungho Electronics Corp has no effect on the direction of GS Engineering i.e., GS Engineering and Sungho Electronics go up and down completely randomly.

Pair Corralation between GS Engineering and Sungho Electronics

Assuming the 90 days trading horizon GS Engineering is expected to generate 2.69 times less return on investment than Sungho Electronics. But when comparing it to its historical volatility, GS Engineering Construction is 1.35 times less risky than Sungho Electronics. It trades about 0.13 of its potential returns per unit of risk. Sungho Electronics Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  103,100  in Sungho Electronics Corp on October 8, 2024 and sell it today you would earn a total of  14,200  from holding Sungho Electronics Corp or generate 13.77% return on investment over 90 days.

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

GS Engineering Construction  vs.  Sungho Electronics Corp

GS Engineering Const

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days GS Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GS Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sungho Electronics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungho Electronics Corp 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GS Engineering and Sungho Electronics

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

The idea behind GS Engineering Construction and Sungho Electronics Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.