Correlation Between SBI Investment and A Tech

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

By analyzing existing cross correlation between SBI Investment KOREA and A Tech Solution Co, you can compare the effects of market volatilities on SBI Investment and A Tech 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 SBI Investment with a short position of A Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and A Tech.

Diversification Opportunities for SBI Investment and A Tech

-0.5

Correlation Coefficient

SBI Investment  A Tech

Very good diversification

The 3 months correlation between SBI and 071670 is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and A Tech Solution Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Tech Solution and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with A Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Tech Solution has no effect on the direction of SBI Investment i.e., SBI Investment and A Tech go up and down completely randomly.

Pair Corralation between SBI Investment and A Tech

Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 0.86 times more return on investment than A Tech. However, SBI Investment KOREA is 1.16 times less risky than A Tech. It trades about -0.02 of its potential returns per unit of risk. A Tech Solution Co is currently generating about -0.03 per unit of risk. If you would invest  118,800  in SBI Investment KOREA on October 5, 2024 and sell it today you would lose (37,000) from holding SBI Investment KOREA or give up 31.14% of portfolio value over 90 days.

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

SBI Investment KOREA  vs.  A Tech Solution Co

SBI Investment KOREA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Investment KOREA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SBI Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

A Tech Solution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A Tech Solution Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SBI Investment and A Tech

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

The idea behind SBI Investment KOREA and A Tech Solution 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.