Correlation Between Ssangyong Information and Puloon Technology

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

Diversification Opportunities for Ssangyong Information and Puloon Technology

0.58

Correlation Coefficient

Ssangyong Information  Puloon Technology

Very weak diversification

The 3 months correlation between Ssangyong and Puloon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon Technology 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 Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Puloon Technology go up and down completely randomly.

Pair Corralation between Ssangyong Information and Puloon Technology

Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the Puloon Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 2.05 times less risky than Puloon Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Puloon Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  599,555  in Puloon Technology on September 24, 2024 and sell it today you would earn a total of  102,445  from holding Puloon Technology or generate 17.09% return on investment over 90 days.

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

Ssangyong Information Communic  vs.  Puloon Technology

Ssangyong Information

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 3 (%) 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.

Puloon Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Puloon Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Puloon Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ssangyong Information and Puloon Technology

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

The idea behind Ssangyong Information Communication and Puloon Technology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.