Correlation Between Sungchang Autotech and Orbitech

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

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

Diversification Opportunities for Sungchang Autotech and Orbitech

0.28

Correlation Coefficient

Sungchang Autotech  Orbitech

Modest diversification

The 3 months correlation between Sungchang and Orbitech is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sungchang Autotech Co and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and Sungchang Autotech 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 Sungchang Autotech Co are associated (or correlated) with Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of Sungchang Autotech i.e., Sungchang Autotech and Orbitech go up and down completely randomly.

Pair Corralation between Sungchang Autotech and Orbitech

Assuming the 90 days trading horizon Sungchang Autotech Co is expected to under-perform the Orbitech. But the stock apears to be less risky and, when comparing its historical volatility, Sungchang Autotech Co is 1.82 times less risky than Orbitech. The stock trades about -0.03 of its potential returns per unit of risk. The Orbitech Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  242,500  in Orbitech Co on November 28, 2024 and sell it today you would earn a total of  17,000  from holding Orbitech Co or generate 7.01% return on investment over 90 days.

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

Sungchang Autotech Co  vs.  Orbitech Co

Sungchang Autotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sungchang Autotech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sungchang Autotech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Orbitech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orbitech Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbitech may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Sungchang Autotech and Orbitech

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

The idea behind Sungchang Autotech Co and Orbitech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.