Correlation Between Seoul Food and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Seoul Food and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Seoul Food and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and SEOJEON ELECTRIC.
Diversification Opportunities for Seoul Food and SEOJEON ELECTRIC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and SEOJEON is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC 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 SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Seoul Food i.e., Seoul Food and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between Seoul Food and SEOJEON ELECTRIC
Assuming the 90 days trading horizon Seoul Food is expected to generate 337.24 times less return on investment than SEOJEON ELECTRIC. But when comparing it to its historical volatility, Seoul Food Industrial is 5.17 times less risky than SEOJEON ELECTRIC. It trades about 0.0 of its potential returns per unit of risk. SEOJEON ELECTRIC MACHINERY is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 407,000 in SEOJEON ELECTRIC MACHINERY on October 24, 2024 and sell it today you would earn a total of 87,500 from holding SEOJEON ELECTRIC MACHINERY or generate 21.5% 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. SEOJEON ELECTRIC MACHINERY
Performance |
| Timeline |
| Seoul Food Industrial |
| SEOJEON ELECTRIC MAC |
Seoul Food and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and SEOJEON ELECTRIC
The main advantage of trading using opposite Seoul Food and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.| Seoul Food vs. Dongil Metal Co | Seoul Food vs. Pureun Mutual Savings | Seoul Food vs. Jinro Distillers Co | Seoul Food vs. Chorokbaem Healthcare Co |
| SEOJEON ELECTRIC vs. Samlip General Foods | SEOJEON ELECTRIC vs. Daiyang Metal Co | SEOJEON ELECTRIC vs. Seoul Food Industrial | SEOJEON ELECTRIC vs. Kukil Metal Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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