Correlation Between Sewoon Medical and FNSTech
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 94.74% |
Values | Daily Returns |
Sewoon Medical Co vs. FNSTech Co
Performance |
Timeline |
Sewoon Medical |
FNSTech |
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.Sewoon Medical vs. SH Energy Chemical | Sewoon Medical vs. Dongbang Ship Machinery | Sewoon Medical vs. Youngchang Chemical Co | Sewoon Medical vs. Kukdong Oil Chemicals |
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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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