Correlation Between Seah Steel and Ecopro
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Ecopro 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 Ecopro 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 Ecopro Co, you can compare the effects of market volatilities on Seah Steel and Ecopro 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 Ecopro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Ecopro.
Diversification Opportunities for Seah Steel and Ecopro
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seah and Ecopro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Ecopro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro 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 Ecopro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro has no effect on the direction of Seah Steel i.e., Seah Steel and Ecopro go up and down completely randomly.
Pair Corralation between Seah Steel and Ecopro
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 0.73 times more return on investment than Ecopro. However, Seah Steel Corp is 1.37 times less risky than Ecopro. It trades about 0.02 of its potential returns per unit of risk. Ecopro Co is currently generating about -0.02 per unit of risk. If you would invest 17,060,000 in Seah Steel Corp on September 1, 2024 and sell it today you would earn a total of 90,000 from holding Seah Steel Corp or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Ecopro Co
Performance |
| Timeline |
| Seah Steel Corp |
| Ecopro |
Seah Steel and Ecopro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Ecopro
The main advantage of trading using opposite Seah Steel and Ecopro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Ecopro 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 Ecopro will offset losses from the drop in Ecopro's long position.| Seah Steel vs. DB Financial Investment | Seah Steel vs. KB Financial Group | Seah Steel vs. Digital Power Communications | Seah Steel vs. Sejong Telecom |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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