Correlation Between Taewoong CoLtd and Sung Kwang

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

By analyzing existing cross correlation between Taewoong CoLtd and Sung Kwang Bend, you can compare the effects of market volatilities on Taewoong CoLtd and Sung Kwang 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 Taewoong CoLtd with a short position of Sung Kwang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taewoong CoLtd and Sung Kwang.

Diversification Opportunities for Taewoong CoLtd and Sung Kwang

-0.2

Correlation Coefficient

Taewoong CoLtd  Sung Kwang

Good diversification

The 3 months correlation between Taewoong and Sung is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Taewoong CoLtd and Sung Kwang Bend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sung Kwang Bend and Taewoong CoLtd 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 Taewoong CoLtd are associated (or correlated) with Sung Kwang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sung Kwang Bend has no effect on the direction of Taewoong CoLtd i.e., Taewoong CoLtd and Sung Kwang go up and down completely randomly.

Pair Corralation between Taewoong CoLtd and Sung Kwang

Assuming the 90 days trading horizon Taewoong CoLtd is expected to under-perform the Sung Kwang. But the stock apears to be less risky and, when comparing its historical volatility, Taewoong CoLtd is 1.05 times less risky than Sung Kwang. The stock trades about -0.02 of its potential returns per unit of risk. The Sung Kwang Bend is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,277,000  in Sung Kwang Bend on October 27, 2024 and sell it today you would earn a total of  1,818,000  from holding Sung Kwang Bend or generate 142.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Taewoong CoLtd  vs.  Sung Kwang Bend

Taewoong CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sung Kwang Bend

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sung Kwang Bend are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sung Kwang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taewoong CoLtd and Sung Kwang

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

The idea behind Taewoong CoLtd and Sung Kwang Bend 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.