Correlation Between Sungchang Autotech and SK Chemicals

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

Diversification Opportunities for Sungchang Autotech and SK Chemicals

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sungchang and 28513K is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sungchang Autotech Co and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Sungchang Autotech i.e., Sungchang Autotech and SK Chemicals go up and down completely randomly.

Pair Corralation between Sungchang Autotech and SK Chemicals

Assuming the 90 days trading horizon Sungchang Autotech Co is expected to generate 1.28 times more return on investment than SK Chemicals. However, Sungchang Autotech is 1.28 times more volatile than SK Chemicals Co. It trades about -0.05 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.12 per unit of risk. If you would invest  401,324  in Sungchang Autotech Co on October 9, 2024 and sell it today you would lose (31,324) from holding Sungchang Autotech Co or give up 7.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Sungchang Autotech Co  vs.  SK Chemicals Co

 Performance 
       Timeline  
Sungchang Autotech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
SK Chemicals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SK Chemicals Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sungchang Autotech and SK Chemicals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sungchang Autotech and SK Chemicals

The main advantage of trading using opposite Sungchang Autotech and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungchang Autotech position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.
The idea behind Sungchang Autotech Co and SK Chemicals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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