Correlation Between Sangsin Energy and Wonil Special

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

By analyzing existing cross correlation between Sangsin Energy Display and Wonil Special Steel, you can compare the effects of market volatilities on Sangsin Energy and Wonil Special 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 Sangsin Energy with a short position of Wonil Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangsin Energy and Wonil Special.

Diversification Opportunities for Sangsin Energy and Wonil Special

0.66

Correlation Coefficient

Sangsin Energy  Wonil Special

Poor diversification

The 3 months correlation between Sangsin and Wonil is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sangsin Energy Display and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special Steel and Sangsin Energy 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 Sangsin Energy Display are associated (or correlated) with Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of Sangsin Energy i.e., Sangsin Energy and Wonil Special go up and down completely randomly.

Pair Corralation between Sangsin Energy and Wonil Special

Assuming the 90 days trading horizon Sangsin Energy Display is expected to generate 2.46 times more return on investment than Wonil Special. However, Sangsin Energy is 2.46 times more volatile than Wonil Special Steel. It trades about 0.36 of its potential returns per unit of risk. Wonil Special Steel is currently generating about 0.43 per unit of risk. If you would invest  643,536  in Sangsin Energy Display on October 9, 2024 and sell it today you would earn a total of  151,464  from holding Sangsin Energy Display or generate 23.54% return on investment over 90 days.

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

Sangsin Energy Display  vs.  Wonil Special Steel

Sangsin Energy Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sangsin Energy Display 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.

Wonil Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sangsin Energy and Wonil Special

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

The idea behind Sangsin Energy Display and Wonil Special Steel 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.