Correlation Between Seoul Food and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Ssangyong Materials 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 Ssangyong Materials 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 Ssangyong Materials Corp, you can compare the effects of market volatilities on Seoul Food and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Ssangyong Materials.
Diversification Opportunities for Seoul Food and Ssangyong Materials
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seoul and Ssangyong is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Seoul Food i.e., Seoul Food and Ssangyong Materials go up and down completely randomly.
Pair Corralation between Seoul Food and Ssangyong Materials
Assuming the 90 days trading horizon Seoul Food is expected to generate 2.6 times less return on investment than Ssangyong Materials. But when comparing it to its historical volatility, Seoul Food Industrial is 1.97 times less risky than Ssangyong Materials. It trades about 0.11 of its potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 229,500 in Ssangyong Materials Corp on October 12, 2024 and sell it today you would earn a total of 12,000 from holding Ssangyong Materials Corp or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Ssangyong Materials Corp
Performance |
| Timeline |
| Seoul Food Industrial |
| Ssangyong Materials Corp |
Seoul Food and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Ssangyong Materials
The main advantage of trading using opposite Seoul Food and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.| Seoul Food vs. Industrial Bank | Seoul Food vs. Songwon Industrial Co | Seoul Food vs. Seoul Electronics Telecom | Seoul Food vs. Drb Industrial |
| Ssangyong Materials vs. PJ Metal Co | Ssangyong Materials vs. Samyang Foods Co | Ssangyong Materials vs. Innowireless Co | Ssangyong Materials vs. Dongbang Transport Logistics |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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