Correlation Between Sewoon Medical and Eugene Technology

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

Diversification Opportunities for Sewoon Medical and Eugene Technology

0.14

Correlation Coefficient

Sewoon Medical  Eugene Technology

Average diversification

The 3 months correlation between Sewoon and Eugene is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and Eugene Technology CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Technology CoLtd 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 Eugene Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Technology CoLtd has no effect on the direction of Sewoon Medical i.e., Sewoon Medical and Eugene Technology go up and down completely randomly.

Pair Corralation between Sewoon Medical and Eugene Technology

Assuming the 90 days trading horizon Sewoon Medical is expected to generate 486.36 times less return on investment than Eugene Technology. But when comparing it to its historical volatility, Sewoon Medical Co is 3.11 times less risky than Eugene Technology. It trades about 0.0 of its potential returns per unit of risk. Eugene Technology CoLtd is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,085,000  in Eugene Technology CoLtd on December 25, 2024 and sell it today you would earn a total of  1,305,000  from holding Eugene Technology CoLtd or generate 42.3% return on investment over 90 days.

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

Sewoon Medical Co  vs.  Eugene Technology CoLtd

Sewoon Medical

Risk-Adjusted Performance

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 somewhat strong basic indicators, Sewoon Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eugene Technology CoLtd

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Technology CoLtd are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eugene Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sewoon Medical and Eugene Technology

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

The idea behind Sewoon Medical Co and Eugene Technology CoLtd 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.