Correlation Between Sungdo Engineering and Mgame Corp

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

Diversification Opportunities for Sungdo Engineering and Mgame Corp

0.24

Correlation Coefficient

Sungdo Engineering  Mgame Corp

Modest diversification

The 3 months correlation between Sungdo and Mgame is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio and Mgame Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mgame Corp 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 Mgame Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mgame Corp has no effect on the direction of Sungdo Engineering i.e., Sungdo Engineering and Mgame Corp go up and down completely randomly.

Pair Corralation between Sungdo Engineering and Mgame Corp

Assuming the 90 days trading horizon Sungdo Engineering Construction is expected to generate 0.98 times more return on investment than Mgame Corp. However, Sungdo Engineering Construction is 1.02 times less risky than Mgame Corp. It trades about 0.01 of its potential returns per unit of risk. Mgame Corp is currently generating about -0.02 per unit of risk. If you would invest  456,515  in Sungdo Engineering Construction on October 22, 2024 and sell it today you would lose (25,015) from holding Sungdo Engineering Construction or give up 5.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.22%
Values	Daily Returns

Sungdo Engineering Constructio  vs.  Mgame Corp

Sungdo Engineering

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Sungdo Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mgame Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mgame Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sungdo Engineering and Mgame Corp

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

The idea behind Sungdo Engineering Construction and Mgame 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.