Correlation Between Sung Kwang and Taewoong CoLtd

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

By analyzing existing cross correlation between Sung Kwang Bend and Taewoong CoLtd, you can compare the effects of market volatilities on Sung Kwang and Taewoong CoLtd 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 Sung Kwang with a short position of Taewoong CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Kwang and Taewoong CoLtd.

Diversification Opportunities for Sung Kwang and Taewoong CoLtd

-0.2

Correlation Coefficient

Sung Kwang  Taewoong CoLtd

Good diversification

The 3 months correlation between Sung and Taewoong is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sung Kwang Bend and Taewoong CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong CoLtd and Sung Kwang 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 Sung Kwang Bend are associated (or correlated) with Taewoong CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong CoLtd has no effect on the direction of Sung Kwang i.e., Sung Kwang and Taewoong CoLtd go up and down completely randomly.

Pair Corralation between Sung Kwang and Taewoong CoLtd

Assuming the 90 days trading horizon Sung Kwang Bend is expected to generate 1.05 times more return on investment than Taewoong CoLtd. However, Sung Kwang is 1.05 times more volatile than Taewoong CoLtd. It trades about 0.36 of its potential returns per unit of risk. Taewoong CoLtd is currently generating about -0.02 per unit of risk. If you would invest  1,277,000  in Sung Kwang Bend on October 27, 2024 and sell it today you would earn a total of  1,818,000  from holding Sung Kwang Bend or generate 142.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sung Kwang Bend  vs.  Taewoong CoLtd

Sung Kwang Bend

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sung Kwang Bend are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sung Kwang sustained solid returns over the last few months and may actually be approaching a breakup point.

Taewoong CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sung Kwang and Taewoong CoLtd

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

The idea behind Sung Kwang Bend and Taewoong CoLtd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..