Correlation Between Sungho Electronics and SH Energy

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

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

Diversification Opportunities for Sungho Electronics and SH Energy

0.23

Correlation Coefficient

Sungho Electronics  SH Energy

Modest diversification

The 3 months correlation between Sungho and 002360 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sungho Electronics Corp and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Sungho Electronics 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 Sungho Electronics Corp are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Sungho Electronics i.e., Sungho Electronics and SH Energy go up and down completely randomly.

Pair Corralation between Sungho Electronics and SH Energy

Assuming the 90 days trading horizon Sungho Electronics is expected to generate 1.33 times less return on investment than SH Energy. But when comparing it to its historical volatility, Sungho Electronics Corp is 1.18 times less risky than SH Energy. It trades about 0.26 of its potential returns per unit of risk. SH Energy Chemical is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  44,900  in SH Energy Chemical on October 8, 2024 and sell it today you would earn a total of  8,400  from holding SH Energy Chemical or generate 18.71% return on investment over 90 days.

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

Sungho Electronics Corp  vs.  SH Energy Chemical

Sungho Electronics Corp

Risk-Adjusted Performance

0 of 100

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 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.

SH Energy Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sungho Electronics and SH Energy

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

The idea behind Sungho Electronics Corp and SH Energy Chemical 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.