Correlation Between Sewoon Medical and Adaptive Plasma

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

Diversification Opportunities for Sewoon Medical and Adaptive Plasma

0.65

Correlation Coefficient

Sewoon Medical  Adaptive Plasma

Poor diversification

The 3 months correlation between Sewoon and Adaptive is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and Adaptive Plasma Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Plasma Tech 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 Adaptive Plasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Plasma Tech has no effect on the direction of Sewoon Medical i.e., Sewoon Medical and Adaptive Plasma go up and down completely randomly.

Pair Corralation between Sewoon Medical and Adaptive Plasma

Assuming the 90 days trading horizon Sewoon Medical Co is expected to under-perform the Adaptive Plasma. But the stock apears to be less risky and, when comparing its historical volatility, Sewoon Medical Co is 2.07 times less risky than Adaptive Plasma. The stock trades about -0.04 of its potential returns per unit of risk. The Adaptive Plasma Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  815,000  in Adaptive Plasma Technology on October 25, 2024 and sell it today you would lose (34,000) from holding Adaptive Plasma Technology or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Sewoon Medical Co  vs.  Adaptive Plasma Technology

Sewoon Medical

Risk-Adjusted Performance

0 of 100

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.

Adaptive Plasma Tech

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Sewoon Medical and Adaptive Plasma

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

The idea behind Sewoon Medical Co and Adaptive Plasma Technology 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.