Correlation Between Seoul Food and National Plastic
Can any of the company-specific risk be diversified away by investing in both Seoul Food and National Plastic 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 Seoul Food and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and National Plastic Co, you can compare the effects of market volatilities on Seoul Food and National Plastic 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 Seoul Food with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and National Plastic.
Diversification Opportunities for Seoul Food and National Plastic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and National is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of Seoul Food i.e., Seoul Food and National Plastic go up and down completely randomly.
Pair Corralation between Seoul Food and National Plastic
Assuming the 90 days trading horizon Seoul Food Industrial is expected to generate 1.22 times more return on investment than National Plastic. However, Seoul Food is 1.22 times more volatile than National Plastic Co. It trades about 0.04 of its potential returns per unit of risk. National Plastic Co is currently generating about 0.01 per unit of risk. If you would invest 14,700 in Seoul Food Industrial on October 17, 2024 and sell it today you would earn a total of 300.00 from holding Seoul Food Industrial or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. National Plastic Co
Performance |
| Timeline |
| Seoul Food Industrial |
| National Plastic |
Seoul Food and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and National Plastic
The main advantage of trading using opposite Seoul Food and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| Seoul Food vs. Shinhan Inverse Silver | Seoul Food vs. J Steel Co | Seoul Food vs. Miwon Chemicals Co | Seoul Food vs. Cloud Air CoLtd |
| National Plastic vs. Organic Special Pet | National Plastic vs. FOODWELL Co | National Plastic vs. Seoul Food Industrial | National Plastic vs. Samlip General Foods |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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