Correlation Between Ssangyong Information and Nable Communications

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

Diversification Opportunities for Ssangyong Information and Nable Communications

0.39

Correlation Coefficient

Ssangyong Information  Nable Communications

Weak diversification

The 3 months correlation between Ssangyong and Nable is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications 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 Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Nable Communications go up and down completely randomly.

Pair Corralation between Ssangyong Information and Nable Communications

Assuming the 90 days trading horizon Ssangyong Information Communication is expected to generate 1.43 times more return on investment than Nable Communications. However, Ssangyong Information is 1.43 times more volatile than Nable Communications. It trades about 0.11 of its potential returns per unit of risk. Nable Communications is currently generating about 0.06 per unit of risk. If you would invest  62,500  in Ssangyong Information Communication on September 19, 2024 and sell it today you would earn a total of  3,000  from holding Ssangyong Information Communication or generate 4.8% return on investment over 90 days.

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

Ssangyong Information Communic  vs.  Nable Communications

Ssangyong Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ssangyong Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nable Communications

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nable Communications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nable Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ssangyong Information and Nable Communications

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

The idea behind Ssangyong Information Communication and Nable Communications 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.