Correlation Between Ssangyong Information and RFTech

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

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

Diversification Opportunities for Ssangyong Information and RFTech

0.69

Correlation Coefficient

Ssangyong Information  RFTech

Poor diversification

The 3 months correlation between Ssangyong and RFTech is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech and Ssangyong Information 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 Ssangyong Information Communication are associated (or correlated) with RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and RFTech go up and down completely randomly.

Pair Corralation between Ssangyong Information and RFTech

Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the RFTech. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 1.39 times less risky than RFTech. The stock trades about -0.03 of its potential returns per unit of risk. The RFTech Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  406,500  in RFTech Co on September 28, 2024 and sell it today you would lose (17,500) from holding RFTech Co or give up 4.31% of portfolio value over 90 days.

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

Ssangyong Information Communic  vs.  RFTech Co

Ssangyong Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ssangyong Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RFTech

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RFTech Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RFTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ssangyong Information and RFTech

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

The idea behind Ssangyong Information Communication and RFTech 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.