Correlation Between Jinro Distillers and Sungwoo Techron

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

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

Diversification Opportunities for Jinro Distillers and Sungwoo Techron

0.59

Correlation Coefficient

Jinro Distillers  Sungwoo Techron

Very weak diversification

The 3 months correlation between Jinro and Sungwoo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and Sungwoo Techron CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Techron CoLtd and Jinro Distillers 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 Jinro Distillers Co are associated (or correlated) with Sungwoo Techron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Techron CoLtd has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and Sungwoo Techron go up and down completely randomly.

Pair Corralation between Jinro Distillers and Sungwoo Techron

Assuming the 90 days trading horizon Jinro Distillers is expected to generate 12.1 times less return on investment than Sungwoo Techron. But when comparing it to its historical volatility, Jinro Distillers Co is 4.67 times less risky than Sungwoo Techron. It trades about 0.2 of its potential returns per unit of risk. Sungwoo Techron CoLtd is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest  250,490  in Sungwoo Techron CoLtd on October 26, 2024 and sell it today you would earn a total of  61,010  from holding Sungwoo Techron CoLtd or generate 24.36% return on investment over 90 days.

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

Jinro Distillers Co  vs.  Sungwoo Techron CoLtd

Jinro Distillers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sungwoo Techron CoLtd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sungwoo Techron CoLtd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sungwoo Techron sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinro Distillers and Sungwoo Techron

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

The idea behind Jinro Distillers Co and Sungwoo Techron 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.