Correlation Between Seoul Food and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Korea Computer 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 Korea Computer 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 Korea Computer Terminal, you can compare the effects of market volatilities on Seoul Food and Korea Computer 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 Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Korea Computer.
Diversification Opportunities for Seoul Food and Korea Computer
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seoul and Korea is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Korea Computer Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Terminal 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 Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Terminal has no effect on the direction of Seoul Food i.e., Seoul Food and Korea Computer go up and down completely randomly.
Pair Corralation between Seoul Food and Korea Computer
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 3.09 times less risky than Korea Computer. The stock trades about -0.01 of its potential returns per unit of risk. The Korea Computer Terminal is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 251,000 in Korea Computer Terminal on August 30, 2024 and sell it today you would lose (4,500) from holding Korea Computer Terminal or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Korea Computer Terminal
Performance |
| Timeline |
| Seoul Food Industrial |
| Korea Computer Terminal |
Seoul Food and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Korea Computer
The main advantage of trading using opposite Seoul Food and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| Seoul Food vs. Osang Healthcare Co,Ltd | Seoul Food vs. Coloray International Investment | Seoul Food vs. Lotte Non Life Insurance | Seoul Food vs. Hanwha InvestmentSecurities Co |
| Korea Computer vs. Sung Bo Chemicals | Korea Computer vs. Youngbo Chemical Co | Korea Computer vs. Miwon Chemical | Korea Computer vs. Youl Chon Chemical |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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