Correlation Between Seoul Food and Genie Music
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Genie Music 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 Genie Music 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 Genie Music, you can compare the effects of market volatilities on Seoul Food and Genie Music 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 Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Genie Music.
Diversification Opportunities for Seoul Food and Genie Music
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and Genie is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music 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 Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Seoul Food i.e., Seoul Food and Genie Music go up and down completely randomly.
Pair Corralation between Seoul Food and Genie Music
Assuming the 90 days trading horizon Seoul Food is expected to generate 3.01 times less return on investment than Genie Music. But when comparing it to its historical volatility, Seoul Food Industrial is 1.88 times less risky than Genie Music. It trades about 0.01 of its potential returns per unit of risk. Genie Music is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 208,500 in Genie Music on September 14, 2024 and sell it today you would lose (500.00) from holding Genie Music or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Genie Music
Performance |
| Timeline |
| Seoul Food Industrial |
| Genie Music |
Seoul Food and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Genie Music
The main advantage of trading using opposite Seoul Food and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music'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 |
| Genie Music vs. WooDeumGee Farm Co, | Genie Music vs. Dongwoo Farm To | Genie Music vs. SungMoon Electronics Co | Genie Music vs. Cuckoo 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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