Correlation Between SP Systems and Young Poong

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

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

Diversification Opportunities for SP Systems and Young Poong

-0.69

Correlation Coefficient

SP Systems  Young Poong

Excellent diversification

The 3 months correlation between 317830 and Young is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SP Systems CoLtd and Young Poong Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Poong Precision and SP Systems 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 SP Systems CoLtd are associated (or correlated) with Young Poong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Poong Precision has no effect on the direction of SP Systems i.e., SP Systems and Young Poong go up and down completely randomly.

Pair Corralation between SP Systems and Young Poong

Assuming the 90 days trading horizon SP Systems CoLtd is expected to generate 2.55 times more return on investment than Young Poong. However, SP Systems is 2.55 times more volatile than Young Poong Precision. It trades about 0.18 of its potential returns per unit of risk. Young Poong Precision is currently generating about -0.05 per unit of risk. If you would invest  423,000  in SP Systems CoLtd on December 23, 2024 and sell it today you would earn a total of  386,000  from holding SP Systems CoLtd or generate 91.25% return on investment over 90 days.

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

SP Systems CoLtd  vs.  Young Poong Precision

SP Systems CoLtd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SP Systems CoLtd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SP Systems sustained solid returns over the last few months and may actually be approaching a breakup point.

Young Poong Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Young Poong Precision 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 SP Systems and Young Poong

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

The idea behind SP Systems CoLtd and Young Poong Precision 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.