Correlation Between Daesung Hi and SNTEnergy

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

By analyzing existing cross correlation between Daesung Hi Tech Co and SNTEnergy Co, you can compare the effects of market volatilities on Daesung Hi and SNTEnergy 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 Daesung Hi with a short position of SNTEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi and SNTEnergy.

Diversification Opportunities for Daesung Hi and SNTEnergy

-0.78

Correlation Coefficient

Daesung Hi  SNTEnergy

Pay attention - limited upside

The 3 months correlation between Daesung and SNTEnergy is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and SNTEnergy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNTEnergy and Daesung Hi 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 Daesung Hi Tech Co are associated (or correlated) with SNTEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNTEnergy has no effect on the direction of Daesung Hi i.e., Daesung Hi and SNTEnergy go up and down completely randomly.

Pair Corralation between Daesung Hi and SNTEnergy

Assuming the 90 days trading horizon Daesung Hi is expected to generate 5.25 times less return on investment than SNTEnergy. But when comparing it to its historical volatility, Daesung Hi Tech Co is 2.61 times less risky than SNTEnergy. It trades about 0.17 of its potential returns per unit of risk. SNTEnergy Co is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,567,000  in SNTEnergy Co on October 10, 2024 and sell it today you would earn a total of  833,000  from holding SNTEnergy Co or generate 53.16% return on investment over 90 days.

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

Daesung Hi Tech Co  vs.  SNTEnergy Co

Daesung Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daesung Hi Tech Co 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.

SNTEnergy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SNTEnergy Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SNTEnergy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daesung Hi and SNTEnergy

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

The idea behind Daesung Hi Tech Co and SNTEnergy Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.