Correlation Between Seoul Food and Homecast CoLtd
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Homecast CoLtd 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 Homecast CoLtd 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 Homecast CoLtd, you can compare the effects of market volatilities on Seoul Food and Homecast CoLtd 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 Homecast CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Homecast CoLtd.
Diversification Opportunities for Seoul Food and Homecast CoLtd
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Homecast is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Homecast CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homecast CoLtd 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 Homecast CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homecast CoLtd has no effect on the direction of Seoul Food i.e., Seoul Food and Homecast CoLtd go up and down completely randomly.
Pair Corralation between Seoul Food and Homecast CoLtd
Assuming the 90 days trading horizon Seoul Food Industrial is expected to generate 0.4 times more return on investment than Homecast CoLtd. However, Seoul Food Industrial is 2.48 times less risky than Homecast CoLtd. It trades about 0.1 of its potential returns per unit of risk. Homecast CoLtd is currently generating about -0.14 per unit of risk. If you would invest 14,800 in Seoul Food Industrial on October 12, 2024 and sell it today you would earn a total of 300.00 from holding Seoul Food Industrial or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Homecast CoLtd
Performance |
| Timeline |
| Seoul Food Industrial |
| Homecast CoLtd |
Seoul Food and Homecast CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Homecast CoLtd
The main advantage of trading using opposite Seoul Food and Homecast CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Homecast CoLtd 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 Homecast CoLtd will offset losses from the drop in Homecast CoLtd's long position.| Seoul Food vs. Shinil Industrial Co | Seoul Food vs. Industrial Bank | Seoul Food vs. Songwon Industrial Co | Seoul Food vs. Formetal Co |
| Homecast CoLtd vs. Seoul Food Industrial | Homecast CoLtd vs. DB Insurance Co | Homecast CoLtd vs. Organic Special Pet | Homecast CoLtd vs. Shinhan Financial Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |