Correlation Between Access Bio and Sungdo Engineering

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

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

Diversification Opportunities for Access Bio and Sungdo Engineering

0.4

Correlation Coefficient

Access Bio  Sungdo Engineering

Very weak diversification

The 3 months correlation between Access and Sungdo is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Access Bio and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and Access Bio 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 Access Bio 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 Access Bio i.e., Access Bio and Sungdo Engineering go up and down completely randomly.

Pair Corralation between Access Bio and Sungdo Engineering

Assuming the 90 days trading horizon Access Bio is expected to generate 1.59 times more return on investment than Sungdo Engineering. However, Access Bio is 1.59 times more volatile than Sungdo Engineering Construction. It trades about 0.01 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about -0.02 per unit of risk. If you would invest  557,000  in Access Bio on December 3, 2024 and sell it today you would lose (5,000) from holding Access Bio or give up 0.9% of portfolio value over 90 days.

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

Access Bio  vs.  Sungdo Engineering Constructio

Access Bio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Access Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Access Bio 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

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 somewhat strong basic indicators, Sungdo Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Access Bio and Sungdo Engineering

The main advantage of trading using opposite Access Bio and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Access Bio 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 Access Bio 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.