Correlation Between AfreecaTV and SS TECH

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

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

Diversification Opportunities for AfreecaTV and SS TECH

0.48

Correlation Coefficient

AfreecaTV  SS TECH

Very weak diversification

The 3 months correlation between AfreecaTV and 101490 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AfreecaTV Co and SS TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS TECH and AfreecaTV 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 AfreecaTV Co are associated (or correlated) with SS TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS TECH has no effect on the direction of AfreecaTV i.e., AfreecaTV and SS TECH go up and down completely randomly.

Pair Corralation between AfreecaTV and SS TECH

Assuming the 90 days trading horizon AfreecaTV Co is expected to generate 0.85 times more return on investment than SS TECH. However, AfreecaTV Co is 1.18 times less risky than SS TECH. It trades about 0.05 of its potential returns per unit of risk. SS TECH is currently generating about -0.07 per unit of risk. If you would invest  10,470,000  in AfreecaTV Co on September 2, 2024 and sell it today you would earn a total of  560,000  from holding AfreecaTV Co or generate 5.35% return on investment over 90 days.

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

AfreecaTV Co  vs.  SS TECH

AfreecaTV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AfreecaTV Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AfreecaTV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SS TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SS TECH 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.

Pair Trading with AfreecaTV and SS TECH

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

The idea behind AfreecaTV Co and SS TECH 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.