Correlation Between Sam Chun and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both Sam Chun and Sejong Telecom 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 Sam Chun and Sejong Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam Chun Dang and Sejong Telecom, you can compare the effects of market volatilities on Sam Chun and Sejong Telecom 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 Sam Chun with a short position of Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Chun and Sejong Telecom.
Diversification Opportunities for Sam Chun and Sejong Telecom
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sam and Sejong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sam Chun Dang and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom and Sam Chun 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 Sam Chun Dang are associated (or correlated) with Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of Sam Chun i.e., Sam Chun and Sejong Telecom go up and down completely randomly.
Pair Corralation between Sam Chun and Sejong Telecom
Assuming the 90 days trading horizon Sam Chun Dang is expected to under-perform the Sejong Telecom. In addition to that, Sam Chun is 3.64 times more volatile than Sejong Telecom. It trades about -0.22 of its total potential returns per unit of risk. Sejong Telecom is currently generating about -0.43 per unit of volatility. If you would invest 49,200 in Sejong Telecom on August 29, 2024 and sell it today you would lose (5,300) from holding Sejong Telecom or give up 10.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam Chun Dang vs. Sejong Telecom
Performance |
| Timeline |
| Sam Chun Dang |
| Sejong Telecom |
Sam Chun and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam Chun and Sejong Telecom
The main advantage of trading using opposite Sam Chun and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Chun position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.The idea behind Sam Chun Dang and Sejong Telecom 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.| Sejong Telecom vs. Sam Chun Dang | Sejong Telecom vs. SAMRYOONG CoLtd | Sejong Telecom vs. BYON Co | Sejong Telecom vs. Sangsangin Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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