Correlation Between Alton Sports and Daewoo SBI

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

By analyzing existing cross correlation between Alton Sports CoLtd and Daewoo SBI SPAC, you can compare the effects of market volatilities on Alton Sports and Daewoo SBI 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 Alton Sports with a short position of Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Daewoo SBI.

Diversification Opportunities for Alton Sports and Daewoo SBI

0.17

Correlation Coefficient

Alton Sports  Daewoo SBI

Average diversification

The 3 months correlation between Alton and Daewoo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC and Alton Sports 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 Alton Sports CoLtd are associated (or correlated) with Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Alton Sports i.e., Alton Sports and Daewoo SBI go up and down completely randomly.

Pair Corralation between Alton Sports and Daewoo SBI

Assuming the 90 days trading horizon Alton Sports is expected to generate 8.1 times less return on investment than Daewoo SBI. But when comparing it to its historical volatility, Alton Sports CoLtd is 1.75 times less risky than Daewoo SBI. It trades about 0.01 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  238,500  in Daewoo SBI SPAC on November 28, 2024 and sell it today you would earn a total of  20,500  from holding Daewoo SBI SPAC or generate 8.6% return on investment over 90 days.

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

Alton Sports CoLtd  vs.  Daewoo SBI SPAC

Alton Sports CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alton Sports CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alton Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daewoo SBI SPAC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daewoo SBI SPAC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daewoo SBI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alton Sports and Daewoo SBI

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

The idea behind Alton Sports CoLtd and Daewoo SBI SPAC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.