Correlation Between SungMoon Electronics and Ecoplastic

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

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

Diversification Opportunities for SungMoon Electronics and Ecoplastic

0.84

Correlation Coefficient

SungMoon Electronics  Ecoplastic

Very poor diversification

The 3 months correlation between SungMoon and Ecoplastic is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic and SungMoon Electronics 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 SungMoon Electronics Co are associated (or correlated) with Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of SungMoon Electronics i.e., SungMoon Electronics and Ecoplastic go up and down completely randomly.

Pair Corralation between SungMoon Electronics and Ecoplastic

Assuming the 90 days trading horizon SungMoon Electronics is expected to generate 2.64 times less return on investment than Ecoplastic. But when comparing it to its historical volatility, SungMoon Electronics Co is 1.68 times less risky than Ecoplastic. It trades about 0.01 of its potential returns per unit of risk. Ecoplastic is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  244,500  in Ecoplastic on September 15, 2024 and sell it today you would lose (1,500) from holding Ecoplastic or give up 0.61% of portfolio value over 90 days.

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

SungMoon Electronics Co  vs.  Ecoplastic

SungMoon Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ecoplastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecoplastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SungMoon Electronics and Ecoplastic

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

The idea behind SungMoon Electronics Co and Ecoplastic 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.