Correlation Between SGA Solutions and SOOSAN INT

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

By analyzing existing cross correlation between SGA Solutions CoLtd and SOOSAN INT Co, you can compare the effects of market volatilities on SGA Solutions and SOOSAN INT 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 SGA Solutions with a short position of SOOSAN INT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGA Solutions and SOOSAN INT.

Diversification Opportunities for SGA Solutions and SOOSAN INT

-0.76

Correlation Coefficient

SGA Solutions  SOOSAN INT

Pay attention - limited upside

The 3 months correlation between SGA and SOOSAN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SGA Solutions CoLtd and SOOSAN INT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOOSAN INT and SGA Solutions 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 SGA Solutions CoLtd are associated (or correlated) with SOOSAN INT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOOSAN INT has no effect on the direction of SGA Solutions i.e., SGA Solutions and SOOSAN INT go up and down completely randomly.

Pair Corralation between SGA Solutions and SOOSAN INT

Assuming the 90 days trading horizon SGA Solutions CoLtd is expected to under-perform the SOOSAN INT. But the stock apears to be less risky and, when comparing its historical volatility, SGA Solutions CoLtd is 4.24 times less risky than SOOSAN INT. The stock trades about -0.06 of its potential returns per unit of risk. The SOOSAN INT Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  854,119  in SOOSAN INT Co on September 29, 2024 and sell it today you would earn a total of  702,881  from holding SOOSAN INT Co or generate 82.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

SGA Solutions CoLtd  vs.  SOOSAN INT Co

SGA Solutions CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

SOOSAN INT

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOOSAN INT Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SOOSAN INT sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SGA Solutions and SOOSAN INT

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

The idea behind SGA Solutions CoLtd and SOOSAN INT 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.