Correlation Between Sungchang Autotech and Parksystems Corp

Can any of the company-specific risk be diversified away by investing in both Sungchang Autotech and Parksystems Corp 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 Parksystems Corp 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 Parksystems Corp, you can compare the effects of market volatilities on Sungchang Autotech and Parksystems Corp 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 Parksystems Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungchang Autotech and Parksystems Corp.

Diversification Opportunities for Sungchang Autotech and Parksystems Corp

0.36

Correlation Coefficient

Sungchang Autotech  Parksystems Corp

Weak diversification

The 3 months correlation between Sungchang and Parksystems is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sungchang Autotech Co and Parksystems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parksystems Corp 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 Parksystems Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parksystems Corp has no effect on the direction of Sungchang Autotech i.e., Sungchang Autotech and Parksystems Corp go up and down completely randomly.

Pair Corralation between Sungchang Autotech and Parksystems Corp

Assuming the 90 days trading horizon Sungchang Autotech Co is expected to under-perform the Parksystems Corp. But the stock apears to be less risky and, when comparing its historical volatility, Sungchang Autotech Co is 1.6 times less risky than Parksystems Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Parksystems Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20,700,000  in Parksystems Corp on December 27, 2024 and sell it today you would earn a total of  850,000  from holding Parksystems Corp or generate 4.11% 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.  Parksystems Corp

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.

Parksystems Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Sungchang Autotech and Parksystems Corp

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

The idea behind Sungchang Autotech Co and Parksystems Corp 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.