Correlation Between Seoul Food and LEADCORP
Can any of the company-specific risk be diversified away by investing in both Seoul Food and LEADCORP 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 LEADCORP 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 The LEADCORP, you can compare the effects of market volatilities on Seoul Food and LEADCORP 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 LEADCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and LEADCORP.
Diversification Opportunities for Seoul Food and LEADCORP
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Seoul and LEADCORP is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and The LEADCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEADCORP 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 LEADCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEADCORP has no effect on the direction of Seoul Food i.e., Seoul Food and LEADCORP go up and down completely randomly.
Pair Corralation between Seoul Food and LEADCORP
Assuming the 90 days trading horizon Seoul Food is expected to generate 1.04 times less return on investment than LEADCORP. In addition to that, Seoul Food is 1.16 times more volatile than The LEADCORP. It trades about 0.01 of its total potential returns per unit of risk. The LEADCORP is currently generating about 0.01 per unit of volatility. If you would invest 417,000 in The LEADCORP on September 14, 2024 and sell it today you would earn a total of 500.00 from holding The LEADCORP or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Seoul Food Industrial vs. The LEADCORP
Performance |
| Timeline |
| Seoul Food Industrial |
| LEADCORP |
Seoul Food and LEADCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and LEADCORP
The main advantage of trading using opposite Seoul Food and LEADCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, LEADCORP 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 LEADCORP will offset losses from the drop in LEADCORP's long position.| Seoul Food vs. Samsung Electronics Co | Seoul Food vs. Samsung Electronics Co | Seoul Food vs. SK Hynix | Seoul Food vs. POSCO Holdings |
| LEADCORP vs. LG Chemicals | LEADCORP vs. Hannong Chemicals | LEADCORP vs. Seoul Food Industrial | LEADCORP vs. Pyung Hwa 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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