Correlation Between Seoul Food and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Daejoo Electronic 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 Daejoo Electronic 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 Daejoo Electronic Materials, you can compare the effects of market volatilities on Seoul Food and Daejoo Electronic 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 Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Daejoo Electronic.
Diversification Opportunities for Seoul Food and Daejoo Electronic
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and Daejoo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic 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 Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Seoul Food i.e., Seoul Food and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Seoul Food and Daejoo Electronic
Assuming the 90 days trading horizon Seoul Food Industrial is expected to generate 0.32 times more return on investment than Daejoo Electronic. However, Seoul Food Industrial is 3.13 times less risky than Daejoo Electronic. It trades about 0.11 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about 0.0 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Seoul Food Industrial |
| Daejoo Electronic |
Seoul Food and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Daejoo Electronic
The main advantage of trading using opposite Seoul Food and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Seoul Food vs. Industrial Bank | Seoul Food vs. Songwon Industrial Co | Seoul Food vs. Seoul Electronics Telecom | Seoul Food vs. Drb Industrial |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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