Correlation Between Seah Steel and Sambo Corrugated
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Sambo Corrugated 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 Sambo Corrugated 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 Sambo Corrugated Board, you can compare the effects of market volatilities on Seah Steel and Sambo Corrugated 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 Sambo Corrugated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Sambo Corrugated.
Diversification Opportunities for Seah Steel and Sambo Corrugated
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seah and Sambo is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Sambo Corrugated Board in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sambo Corrugated Board 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 Sambo Corrugated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sambo Corrugated Board has no effect on the direction of Seah Steel i.e., Seah Steel and Sambo Corrugated go up and down completely randomly.
Pair Corralation between Seah Steel and Sambo Corrugated
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 5.03 times more return on investment than Sambo Corrugated. However, Seah Steel is 5.03 times more volatile than Sambo Corrugated Board. It trades about 0.36 of its potential returns per unit of risk. Sambo Corrugated Board is currently generating about -0.12 per unit of risk. If you would invest 18,100,000 in Seah Steel Corp on October 24, 2024 and sell it today you would earn a total of 4,200,000 from holding Seah Steel Corp or generate 23.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Sambo Corrugated Board
Performance |
| Timeline |
| Seah Steel Corp |
| Sambo Corrugated Board |
Seah Steel and Sambo Corrugated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Sambo Corrugated
The main advantage of trading using opposite Seah Steel and Sambo Corrugated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Sambo Corrugated 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 Sambo Corrugated will offset losses from the drop in Sambo Corrugated's long position.| Seah Steel vs. Jeong Moon Information | Seah Steel vs. Ssangyong Information Communication | Seah Steel vs. Wonil Special Steel | Seah Steel vs. Daehan Steel |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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