Correlation Between Seoul Food and DAEDUCK ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Seoul Food and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS CoLtd, you can compare the effects of market volatilities on Seoul Food and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and DAEDUCK ELECTRONICS.
Diversification Opportunities for Seoul Food and DAEDUCK ELECTRONICS
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and DAEDUCK is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and DAEDUCK ELECTRONICS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEDUCK ELECTRONICS CoLtd has no effect on the direction of Seoul Food i.e., Seoul Food and DAEDUCK ELECTRONICS go up and down completely randomly.
Pair Corralation between Seoul Food and DAEDUCK ELECTRONICS
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the DAEDUCK ELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.1 times less risky than DAEDUCK ELECTRONICS. The stock trades about -0.11 of its potential returns per unit of risk. The DAEDUCK ELECTRONICS CoLtd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 896,000 in DAEDUCK ELECTRONICS CoLtd on August 30, 2024 and sell it today you would lose (72,000) from holding DAEDUCK ELECTRONICS CoLtd or give up 8.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. DAEDUCK ELECTRONICS CoLtd
Performance |
| Timeline |
| Seoul Food Industrial |
| DAEDUCK ELECTRONICS CoLtd |
Seoul Food and DAEDUCK ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and DAEDUCK ELECTRONICS
The main advantage of trading using opposite Seoul Food and DAEDUCK ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS will offset losses from the drop in DAEDUCK ELECTRONICS'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 |
| DAEDUCK ELECTRONICS vs. Busan Industrial Co | DAEDUCK ELECTRONICS vs. Busan Ind | DAEDUCK ELECTRONICS vs. Shinhan WTI Futures | DAEDUCK ELECTRONICS vs. Finebesteel |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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