Correlation Between NEOWIZ HOLDINGS and SungMoon Electronics

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

By analyzing existing cross correlation between NEOWIZ HOLDINGS and SungMoon Electronics Co, you can compare the effects of market volatilities on NEOWIZ HOLDINGS and SungMoon 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 NEOWIZ HOLDINGS with a short position of SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEOWIZ HOLDINGS and SungMoon Electronics.

Diversification Opportunities for NEOWIZ HOLDINGS and SungMoon Electronics

-0.14

Correlation Coefficient

NEOWIZ HOLDINGS  SungMoon Electronics

Good diversification

The 3 months correlation between NEOWIZ and SungMoon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NEOWIZ HOLDINGS and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon Electronics and NEOWIZ HOLDINGS 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 NEOWIZ HOLDINGS are associated (or correlated) with SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of NEOWIZ HOLDINGS i.e., NEOWIZ HOLDINGS and SungMoon Electronics go up and down completely randomly.

Pair Corralation between NEOWIZ HOLDINGS and SungMoon Electronics

Assuming the 90 days trading horizon NEOWIZ HOLDINGS is expected to generate 2.9 times more return on investment than SungMoon Electronics. However, NEOWIZ HOLDINGS is 2.9 times more volatile than SungMoon Electronics Co. It trades about 0.11 of its potential returns per unit of risk. SungMoon Electronics Co is currently generating about 0.03 per unit of risk. If you would invest  1,900,000  in NEOWIZ HOLDINGS on September 16, 2024 and sell it today you would earn a total of  250,000  from holding NEOWIZ HOLDINGS or generate 13.16% return on investment over 90 days.

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

NEOWIZ HOLDINGS  vs.  SungMoon Electronics Co

NEOWIZ HOLDINGS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NEOWIZ HOLDINGS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NEOWIZ HOLDINGS sustained solid returns over the last few months and may actually be approaching a breakup point.

SungMoon Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NEOWIZ HOLDINGS and SungMoon Electronics

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

The idea behind NEOWIZ HOLDINGS and SungMoon Electronics 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.