Correlation Between CU Medical and Poongsan

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

By analyzing existing cross correlation between CU Medical Systems and Poongsan, you can compare the effects of market volatilities on CU Medical and Poongsan 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 CU Medical with a short position of Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Medical and Poongsan.

Diversification Opportunities for CU Medical and Poongsan

0.72

Correlation Coefficient

CU Medical  Poongsan

Poor diversification

The 3 months correlation between 115480 and Poongsan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CU Medical Systems and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan and CU 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 CU Medical Systems are associated (or correlated) with Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of CU Medical i.e., CU Medical and Poongsan go up and down completely randomly.

Pair Corralation between CU Medical and Poongsan

Assuming the 90 days trading horizon CU Medical Systems is expected to generate 0.62 times more return on investment than Poongsan. However, CU Medical Systems is 1.61 times less risky than Poongsan. It trades about -0.13 of its potential returns per unit of risk. Poongsan is currently generating about -0.13 per unit of risk. If you would invest  79,400  in CU Medical Systems on October 5, 2024 and sell it today you would lose (11,300) from holding CU Medical Systems or give up 14.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

CU Medical Systems  vs.  Poongsan

CU Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CU Medical Systems 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.

Poongsan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poongsan 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.

Pair Trading with CU Medical and Poongsan

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

The idea behind CU Medical Systems and Poongsan 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.