Correlation Between Barunson Entertainment and Sungho Electronics

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

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

Diversification Opportunities for Barunson Entertainment and Sungho Electronics

0.76

Correlation Coefficient

Barunson Entertainment  Sungho Electronics

Poor diversification

The 3 months correlation between Barunson and Sungho is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Barunson Entertainment Arts and Sungho Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungho Electronics Corp and Barunson Entertainment 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 Barunson Entertainment Arts are associated (or correlated) with Sungho Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungho Electronics Corp has no effect on the direction of Barunson Entertainment i.e., Barunson Entertainment and Sungho Electronics go up and down completely randomly.

Pair Corralation between Barunson Entertainment and Sungho Electronics

Assuming the 90 days trading horizon Barunson Entertainment Arts is expected to generate 0.84 times more return on investment than Sungho Electronics. However, Barunson Entertainment Arts is 1.19 times less risky than Sungho Electronics. It trades about -0.07 of its potential returns per unit of risk. Sungho Electronics Corp is currently generating about -0.1 per unit of risk. If you would invest  42,300  in Barunson Entertainment Arts on December 25, 2024 and sell it today you would lose (2,600) from holding Barunson Entertainment Arts or give up 6.15% of portfolio value over 90 days.

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

Barunson Entertainment Arts  vs.  Sungho Electronics Corp

Barunson Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barunson Entertainment Arts 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.

Sungho Electronics Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sungho Electronics Corp 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 Barunson Entertainment and Sungho Electronics

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

The idea behind Barunson Entertainment Arts and Sungho Electronics Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.