Correlation Between Camus Engineering and Songwon Industrial

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

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

Diversification Opportunities for Camus Engineering and Songwon Industrial

0.28

Correlation Coefficient

Camus Engineering  Songwon Industrial

Modest diversification

The 3 months correlation between Camus and Songwon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Camus Engineering Construction and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Camus 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 Camus Engineering Construction are associated (or correlated) with Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Camus Engineering i.e., Camus Engineering and Songwon Industrial go up and down completely randomly.

Pair Corralation between Camus Engineering and Songwon Industrial

Assuming the 90 days trading horizon Camus Engineering Construction is expected to under-perform the Songwon Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Camus Engineering Construction is 1.3 times less risky than Songwon Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The Songwon Industrial Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,601,992  in Songwon Industrial Co on September 15, 2024 and sell it today you would lose (475,992) from holding Songwon Industrial Co or give up 29.71% of portfolio value over 90 days.

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

Camus Engineering Construction  vs.  Songwon Industrial Co

Camus Engineering

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Camus Engineering Construction are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Camus Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Songwon Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Songwon Industrial Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Songwon Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Camus Engineering and Songwon Industrial

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

The idea behind Camus Engineering Construction and Songwon Industrial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.