Correlation Between Sungdo Engineering and Aprogen Healthcare

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

Diversification Opportunities for Sungdo Engineering and Aprogen Healthcare

0.51

Correlation Coefficient

Sungdo Engineering  Aprogen Healthcare

Very weak diversification

The 3 months correlation between Sungdo and Aprogen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio and Aprogen Healthcare Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen Healthcare Games 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 Aprogen Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen Healthcare Games has no effect on the direction of Sungdo Engineering i.e., Sungdo Engineering and Aprogen Healthcare go up and down completely randomly.

Pair Corralation between Sungdo Engineering and Aprogen Healthcare

Assuming the 90 days trading horizon Sungdo Engineering Construction is expected to under-perform the Aprogen Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Sungdo Engineering Construction is 1.56 times less risky than Aprogen Healthcare. The stock trades about -0.1 of its potential returns per unit of risk. The Aprogen Healthcare Games is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  51,000  in Aprogen Healthcare Games on December 24, 2024 and sell it today you would lose (3,600) from holding Aprogen Healthcare Games or give up 7.06% of portfolio value over 90 days.

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

Sungdo Engineering Constructio  vs.  Aprogen Healthcare Games

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.

Aprogen Healthcare Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aprogen Healthcare Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aprogen Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sungdo Engineering and Aprogen Healthcare

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

The idea behind Sungdo Engineering Construction and Aprogen Healthcare Games 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..