Correlation Between Seoul Food and DIGITAL CHOSUN
Can any of the company-specific risk be diversified away by investing in both Seoul Food and DIGITAL CHOSUN 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 DIGITAL CHOSUN 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 DIGITAL CHOSUN, you can compare the effects of market volatilities on Seoul Food and DIGITAL CHOSUN 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 DIGITAL CHOSUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and DIGITAL CHOSUN.
Diversification Opportunities for Seoul Food and DIGITAL CHOSUN
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seoul and DIGITAL is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and DIGITAL CHOSUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL CHOSUN 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 DIGITAL CHOSUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL CHOSUN has no effect on the direction of Seoul Food i.e., Seoul Food and DIGITAL CHOSUN go up and down completely randomly.
Pair Corralation between Seoul Food and DIGITAL CHOSUN
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the DIGITAL CHOSUN. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.57 times less risky than DIGITAL CHOSUN. The stock trades about -0.05 of its potential returns per unit of risk. The DIGITAL CHOSUN is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 249,706 in DIGITAL CHOSUN on September 29, 2024 and sell it today you would lose (86,006) from holding DIGITAL CHOSUN or give up 34.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Seoul Food Industrial vs. DIGITAL CHOSUN
Performance |
| Timeline |
| Seoul Food Industrial |
| DIGITAL CHOSUN |
Seoul Food and DIGITAL CHOSUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and DIGITAL CHOSUN
The main advantage of trading using opposite Seoul Food and DIGITAL CHOSUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, DIGITAL CHOSUN 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 DIGITAL CHOSUN will offset losses from the drop in DIGITAL CHOSUN's long position.| Seoul Food vs. AptaBio Therapeutics | Seoul Food vs. Wonbang Tech Co | Seoul Food vs. Busan Industrial Co | Seoul Food vs. Busan Ind |
| DIGITAL CHOSUN vs. Anam Electronics Co | DIGITAL CHOSUN vs. Hanmi Semiconductor Co | DIGITAL CHOSUN vs. Daishin Information Communications | DIGITAL CHOSUN vs. Shinil Electronics Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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