Correlation Between Walgreens Boots and Sungho Electronics

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

By analyzing existing cross correlation between Walgreens Boots Alliance and Sungho Electronics Corp, you can compare the effects of market volatilities on Walgreens Boots and Sungho Electronics 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 Walgreens Boots with a short position of Sungho Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Sungho Electronics.

Diversification Opportunities for Walgreens Boots and Sungho Electronics

-0.13

Correlation Coefficient

Walgreens Boots  Sungho Electronics

Good diversification

The 3 months correlation between Walgreens and Sungho is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Sungho Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungho Electronics Corp and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with Sungho Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungho Electronics Corp has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Sungho Electronics go up and down completely randomly.

Pair Corralation between Walgreens Boots and Sungho Electronics

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Sungho Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.1 times less risky than Sungho Electronics. The stock trades about -0.08 of its potential returns per unit of risk. The Sungho Electronics Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  139,900  in Sungho Electronics Corp on October 3, 2024 and sell it today you would lose (27,800) from holding Sungho Electronics Corp or give up 19.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Sungho Electronics Corp

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Sungho Electronics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungho Electronics Corp 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.

Pair Trading with Walgreens Boots and Sungho Electronics

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

The idea behind Walgreens Boots Alliance and Sungho Electronics Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.