Correlation Between Seah Steel and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Korea Petro 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 Seah Steel and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seah Steel Corp and Korea Petro Chemical, you can compare the effects of market volatilities on Seah Steel and Korea Petro 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 Seah Steel with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Korea Petro.
Diversification Opportunities for Seah Steel and Korea Petro
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seah and Korea is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Seah Steel 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 Seah Steel Corp are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Seah Steel i.e., Seah Steel and Korea Petro go up and down completely randomly.
Pair Corralation between Seah Steel and Korea Petro
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 0.98 times more return on investment than Korea Petro. However, Seah Steel Corp is 1.02 times less risky than Korea Petro. It trades about 0.02 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.03 per unit of risk. If you would invest 16,473,000 in Seah Steel Corp on August 25, 2024 and sell it today you would earn a total of 1,007,000 from holding Seah Steel Corp or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Korea Petro Chemical
Performance |
| Timeline |
| Seah Steel Corp |
| Korea Petro Chemical |
Seah Steel and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Korea Petro
The main advantage of trading using opposite Seah Steel and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Seah Steel vs. Moonbae Steel | Seah Steel vs. TK Chemical | Seah Steel vs. LG Chemicals | Seah Steel vs. Husteel |
| Korea Petro vs. MediaZen | Korea Petro vs. Asiana Airlines | Korea Petro vs. Daiyang Metal Co | Korea Petro vs. Samhwa Paint Industrial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |