Correlation Between SBI Investment and Cots Technology

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

Diversification Opportunities for SBI Investment and Cots Technology

-0.68

Correlation Coefficient

SBI Investment  Cots Technology

Excellent diversification

The 3 months correlation between SBI and Cots is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Cots Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cots Technology 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 Cots Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cots Technology has no effect on the direction of SBI Investment i.e., SBI Investment and Cots Technology go up and down completely randomly.

Pair Corralation between SBI Investment and Cots Technology

Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the Cots Technology. But the stock apears to be less risky and, when comparing its historical volatility, SBI Investment KOREA is 1.77 times less risky than Cots Technology. The stock trades about -0.11 of its potential returns per unit of risk. The Cots Technology Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,439,000  in Cots Technology Co on December 22, 2024 and sell it today you would earn a total of  366,000  from holding Cots Technology Co or generate 25.43% return on investment over 90 days.

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

SBI Investment KOREA  vs.  Cots Technology Co

SBI Investment KOREA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SBI Investment KOREA 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.

Cots Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cots Technology Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cots Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Investment and Cots Technology

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

The idea behind SBI Investment KOREA and Cots Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.