Correlation Between RFTech and Sungmoon Electronics
Can any of the company-specific risk be diversified away by investing in both RFTech and Sungmoon Electronics 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 RFTech and Sungmoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFTech Co and Sungmoon Electronics Co, you can compare the effects of market volatilities on RFTech and Sungmoon Electronics 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 RFTech with a short position of Sungmoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and Sungmoon Electronics.
Diversification Opportunities for RFTech and Sungmoon Electronics
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RFTech and Sungmoon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and Sungmoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungmoon Electronics and RFTech 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 RFTech Co are associated (or correlated) with Sungmoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungmoon Electronics has no effect on the direction of RFTech i.e., RFTech and Sungmoon Electronics go up and down completely randomly.
Pair Corralation between RFTech and Sungmoon Electronics
Assuming the 90 days trading horizon RFTech Co is expected to generate 0.55 times more return on investment than Sungmoon Electronics. However, RFTech Co is 1.82 times less risky than Sungmoon Electronics. It trades about 0.21 of its potential returns per unit of risk. Sungmoon Electronics Co is currently generating about -0.01 per unit of risk. If you would invest 307,000 in RFTech Co on September 23, 2024 and sell it today you would earn a total of 78,500 from holding RFTech Co or generate 25.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
RFTech Co vs. Sungmoon Electronics Co
Performance |
Timeline |
RFTech |
Sungmoon Electronics |
RFTech and Sungmoon Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RFTech and Sungmoon Electronics
The main advantage of trading using opposite RFTech and Sungmoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech position performs unexpectedly, Sungmoon Electronics 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 Sungmoon Electronics will offset losses from the drop in Sungmoon Electronics' long position.RFTech vs. Busan Industrial Co | RFTech vs. Busan Ind | RFTech vs. Mirae Asset Daewoo | RFTech vs. Shinhan WTI Futures |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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