Correlation Between Cuckoo Electronics and Sungdo Engineering

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

By analyzing existing cross correlation between Cuckoo Electronics Co and Sungdo Engineering Construction, you can compare the effects of market volatilities on Cuckoo Electronics and Sungdo Engineering 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 Cuckoo Electronics with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cuckoo Electronics and Sungdo Engineering.

Diversification Opportunities for Cuckoo Electronics and Sungdo Engineering

0.12

Correlation Coefficient

Cuckoo Electronics  Sungdo Engineering

Average diversification

The 3 months correlation between Cuckoo and Sungdo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cuckoo Electronics Co and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and Cuckoo Electronics 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 Cuckoo Electronics Co are associated (or correlated) with Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Cuckoo Electronics i.e., Cuckoo Electronics and Sungdo Engineering go up and down completely randomly.

Pair Corralation between Cuckoo Electronics and Sungdo Engineering

Assuming the 90 days trading horizon Cuckoo Electronics Co is expected to under-perform the Sungdo Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Cuckoo Electronics Co is 1.34 times less risky than Sungdo Engineering. The stock trades about -0.14 of its potential returns per unit of risk. The Sungdo Engineering Construction is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  437,500  in Sungdo Engineering Construction on October 12, 2024 and sell it today you would earn a total of  42,500  from holding Sungdo Engineering Construction or generate 9.71% return on investment over 90 days.

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

Cuckoo Electronics Co  vs.  Sungdo Engineering Constructio

Cuckoo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sungdo Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungdo Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cuckoo Electronics and Sungdo Engineering

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

The idea behind Cuckoo Electronics Co and Sungdo Engineering Construction 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.