Correlation Between Seoul Food and Guyoung Technology
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Guyoung Technology 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 Guyoung Technology 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 Guyoung Technology Co, you can compare the effects of market volatilities on Seoul Food and Guyoung Technology 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 Guyoung Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Guyoung Technology.
Diversification Opportunities for Seoul Food and Guyoung Technology
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and Guyoung is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Guyoung Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guyoung Technology 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 Guyoung Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guyoung Technology has no effect on the direction of Seoul Food i.e., Seoul Food and Guyoung Technology go up and down completely randomly.
Pair Corralation between Seoul Food and Guyoung Technology
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Guyoung Technology. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 3.71 times less risky than Guyoung Technology. The stock trades about -0.11 of its potential returns per unit of risk. The Guyoung Technology Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 203,500 in Guyoung Technology Co on November 1, 2024 and sell it today you would earn a total of 23,500 from holding Guyoung Technology Co or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Guyoung Technology Co
Performance |
| Timeline |
| Seoul Food Industrial |
| Guyoung Technology |
Seoul Food and Guyoung Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Guyoung Technology
The main advantage of trading using opposite Seoul Food and Guyoung Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Guyoung Technology 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 Guyoung Technology will offset losses from the drop in Guyoung Technology's long position.| Seoul Food vs. Hanjin Transportation Co | Seoul Food vs. Daechang Steel Co | Seoul Food vs. Insun Environment New | Seoul Food vs. Alton Sports CoLtd |
| Guyoung Technology vs. Samick Musical Instruments | Guyoung Technology vs. Seoul Food Industrial | Guyoung Technology vs. Kisan Telecom Co | Guyoung Technology vs. Organic Special Pet |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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