Correlation Between Sewoon Medical and FNSTech

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Can any of the company-specific risk be diversified away by investing in both Sewoon Medical and FNSTech 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 Sewoon Medical and FNSTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sewoon Medical Co and FNSTech Co, you can compare the effects of market volatilities on Sewoon Medical and FNSTech 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 Sewoon Medical with a short position of FNSTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sewoon Medical and FNSTech.

Diversification Opportunities for Sewoon Medical and FNSTech

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Sewoon and FNSTech is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech and Sewoon Medical 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 Sewoon Medical Co are associated (or correlated) with FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of Sewoon Medical i.e., Sewoon Medical and FNSTech go up and down completely randomly.

Pair Corralation between Sewoon Medical and FNSTech

Assuming the 90 days trading horizon Sewoon Medical is expected to generate 5.56 times less return on investment than FNSTech. But when comparing it to its historical volatility, Sewoon Medical Co is 2.99 times less risky than FNSTech. It trades about 0.22 of its potential returns per unit of risk. FNSTech Co is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  785,000  in FNSTech Co on October 22, 2024 and sell it today you would earn a total of  254,000  from holding FNSTech Co or generate 32.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy94.74%
ValuesDaily Returns

Sewoon Medical Co  vs.  FNSTech Co

 Performance 
       Timeline  
Sewoon Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sewoon Medical 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.
FNSTech 

Risk-Adjusted Performance

3 of 100

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

Sewoon Medical and FNSTech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sewoon Medical and FNSTech

The main advantage of trading using opposite Sewoon Medical and FNSTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sewoon Medical position performs unexpectedly, FNSTech 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 FNSTech will offset losses from the drop in FNSTech's long position.
The idea behind Sewoon Medical Co and FNSTech 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.
Check out your portfolio center.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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