Correlation Between Sungdo Engineering and Husteel

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

By analyzing existing cross correlation between Sungdo Engineering Construction and Husteel, you can compare the effects of market volatilities on Sungdo Engineering and Husteel 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 Sungdo Engineering with a short position of Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungdo Engineering and Husteel.

Diversification Opportunities for Sungdo Engineering and Husteel

-0.57

Correlation Coefficient

Sungdo Engineering  Husteel

Excellent diversification

The 3 months correlation between Sungdo and Husteel is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel and Sungdo Engineering 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 Sungdo Engineering Construction are associated (or correlated) with Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of Sungdo Engineering i.e., Sungdo Engineering and Husteel go up and down completely randomly.

Pair Corralation between Sungdo Engineering and Husteel

Assuming the 90 days trading horizon Sungdo Engineering Construction is expected to under-perform the Husteel. But the stock apears to be less risky and, when comparing its historical volatility, Sungdo Engineering Construction is 2.08 times less risky than Husteel. The stock trades about -0.09 of its potential returns per unit of risk. The Husteel is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  389,000  in Husteel on December 23, 2024 and sell it today you would earn a total of  211,000  from holding Husteel or generate 54.24% return on investment over 90 days.

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

Sungdo Engineering Constructio  vs.  Husteel

Sungdo Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sungdo Engineering Construction 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.

Husteel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Husteel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Husteel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sungdo Engineering and Husteel

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

The idea behind Sungdo Engineering Construction and Husteel 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.