Correlation Between SFA Engineering and Taewoong CoLtd

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

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

Diversification Opportunities for SFA Engineering and Taewoong CoLtd

0.0

Correlation Coefficient

SFA Engineering  Taewoong CoLtd

Pay attention - limited upside

The 3 months correlation between SFA and Taewoong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and Taewoong CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong CoLtd 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 Taewoong CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong CoLtd has no effect on the direction of SFA Engineering i.e., SFA Engineering and Taewoong CoLtd go up and down completely randomly.

Pair Corralation between SFA Engineering and Taewoong CoLtd

If you would invest  1,994,920  in SFA Engineering on December 22, 2024 and sell it today you would earn a total of  100,080  from holding SFA Engineering or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SFA Engineering  vs.  Taewoong CoLtd

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.

Taewoong CoLtd

Risk-Adjusted Performance

Solid

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.

Pair Trading with SFA Engineering and Taewoong CoLtd

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

The idea behind SFA Engineering and Taewoong CoLtd 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.