Correlation Between SFA Engineering and Sungwoo Hitech

Can any of the company-specific risk be diversified away by investing in both SFA Engineering and Sungwoo Hitech 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 SFA Engineering and Sungwoo Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for SFA Engineering and Sungwoo Hitech

0.19

Correlation Coefficient

SFA Engineering  Sungwoo Hitech

Average diversification

The 3 months correlation between SFA and Sungwoo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and Sungwoo Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Hitech and SFA 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 SFA Engineering are associated (or correlated) with Sungwoo Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Hitech has no effect on the direction of SFA Engineering i.e., SFA Engineering and Sungwoo Hitech go up and down completely randomly.

Pair Corralation between SFA Engineering and Sungwoo Hitech

Assuming the 90 days trading horizon SFA Engineering is expected to generate 1.41 times less return on investment than Sungwoo Hitech. But when comparing it to its historical volatility, SFA Engineering is 1.26 times less risky than Sungwoo Hitech. It trades about 0.06 of its potential returns per unit of risk. Sungwoo Hitech Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  498,971  in Sungwoo Hitech Co on December 23, 2024 and sell it today you would earn a total of  35,029  from holding Sungwoo Hitech Co or generate 7.02% return on investment over 90 days.

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

SFA Engineering  vs.  Sungwoo Hitech Co

SFA Engineering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SFA Engineering are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SFA Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sungwoo Hitech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sungwoo Hitech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sungwoo Hitech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SFA Engineering and Sungwoo Hitech

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

The idea behind SFA Engineering and Sungwoo Hitech 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 Commodity Directory module to find actively traded commodities issued by global exchanges.