Correlation Between Sungmoon Electronics and COWAY

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

Diversification Opportunities for Sungmoon Electronics and COWAY

0.19

Correlation Coefficient

Sungmoon Electronics  COWAY

Average diversification

The 3 months correlation between Sungmoon and COWAY is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sungmoon Electronics Co and COWAY Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COWAY 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 COWAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COWAY has no effect on the direction of Sungmoon Electronics i.e., Sungmoon Electronics and COWAY go up and down completely randomly.

Pair Corralation between Sungmoon Electronics and COWAY

Assuming the 90 days trading horizon Sungmoon Electronics is expected to generate 638.38 times less return on investment than COWAY. In addition to that, Sungmoon Electronics is 1.12 times more volatile than COWAY Co. It trades about 0.0 of its total potential returns per unit of risk. COWAY Co is currently generating about 0.18 per unit of volatility. If you would invest  6,517,000  in COWAY Co on December 25, 2024 and sell it today you would earn a total of  1,973,000  from holding COWAY Co or generate 30.27% return on investment over 90 days.

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

Sungmoon Electronics Co  vs.  COWAY Co

Sungmoon Electronics

Risk-Adjusted Performance

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.

COWAY

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COWAY Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COWAY sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sungmoon Electronics and COWAY

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

The idea behind Sungmoon Electronics Co and COWAY 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.