Correlation Between SFA Engineering and JUSUNG ENGINEERING

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

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

Diversification Opportunities for SFA Engineering and JUSUNG ENGINEERING

-0.56

Correlation Coefficient

SFA Engineering  JUSUNG ENGINEERING

Excellent diversification

The 3 months correlation between SFA and JUSUNG is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and JUSUNG ENGINEERING Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JUSUNG ENGINEERING 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 JUSUNG ENGINEERING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JUSUNG ENGINEERING has no effect on the direction of SFA Engineering i.e., SFA Engineering and JUSUNG ENGINEERING go up and down completely randomly.

Pair Corralation between SFA Engineering and JUSUNG ENGINEERING

Assuming the 90 days trading horizon SFA Engineering is expected to under-perform the JUSUNG ENGINEERING. But the stock apears to be less risky and, when comparing its historical volatility, SFA Engineering is 1.22 times less risky than JUSUNG ENGINEERING. The stock trades about -0.07 of its potential returns per unit of risk. The JUSUNG ENGINEERING Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,375,000  in JUSUNG ENGINEERING Co on September 4, 2024 and sell it today you would earn a total of  225,000  from holding JUSUNG ENGINEERING Co or generate 9.47% return on investment over 90 days.

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

SFA Engineering  vs.  JUSUNG ENGINEERING Co

SFA Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFA Engineering 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JUSUNG ENGINEERING

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JUSUNG ENGINEERING Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JUSUNG ENGINEERING sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SFA Engineering and JUSUNG ENGINEERING

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

The idea behind SFA Engineering and JUSUNG ENGINEERING 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.