Correlation Between Seah Steel and Poongsan
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Poongsan 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 Poongsan 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 Poongsan, you can compare the effects of market volatilities on Seah Steel and Poongsan 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 Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Poongsan.
Diversification Opportunities for Seah Steel and Poongsan
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seah and Poongsan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Seah Steel i.e., Seah Steel and Poongsan go up and down completely randomly.
Pair Corralation between Seah Steel and Poongsan
Assuming the 90 days trading horizon Seah Steel is expected to generate 1.56 times less return on investment than Poongsan. In addition to that, Seah Steel is 1.06 times more volatile than Poongsan. It trades about 0.03 of its total potential returns per unit of risk. Poongsan is currently generating about 0.05 per unit of volatility. If you would invest 3,545,000 in Poongsan on October 15, 2024 and sell it today you would earn a total of 1,805,000 from holding Poongsan or generate 50.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Poongsan
Performance |
| Timeline |
| Seah Steel Corp |
| Poongsan |
Seah Steel and Poongsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Poongsan
The main advantage of trading using opposite Seah Steel and Poongsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Poongsan 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 Poongsan will offset losses from the drop in Poongsan's long position.| Seah Steel vs. Alton Sports CoLtd | Seah Steel vs. Seers Technology | Seah Steel vs. BIT Computer Co | Seah Steel vs. Inzi Display CoLtd |
| Poongsan vs. KakaoBank Corp | Poongsan vs. LG Chemicals | Poongsan vs. Jb Financial | Poongsan vs. DB Financial Investment |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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