Correlation Between Seoul Food and Organic Special
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Organic Special 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 Organic Special 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 Organic Special Pet, you can compare the effects of market volatilities on Seoul Food and Organic Special 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 Organic Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Organic Special.
Diversification Opportunities for Seoul Food and Organic Special
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and Organic is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Organic Special Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Special Pet 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 Organic Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Special Pet has no effect on the direction of Seoul Food i.e., Seoul Food and Organic Special go up and down completely randomly.
Pair Corralation between Seoul Food and Organic Special
Assuming the 90 days trading horizon Seoul Food Industrial is expected to generate 0.62 times more return on investment than Organic Special. However, Seoul Food Industrial is 1.61 times less risky than Organic Special. It trades about -0.08 of its potential returns per unit of risk. Organic Special Pet is currently generating about -0.15 per unit of risk. If you would invest 17,700 in Seoul Food Industrial on September 3, 2024 and sell it today you would lose (2,800) from holding Seoul Food Industrial or give up 15.82% 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. Organic Special Pet
Performance |
| Timeline |
| Seoul Food Industrial |
| Organic Special Pet |
Seoul Food and Organic Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Organic Special
The main advantage of trading using opposite Seoul Food and Organic Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Organic Special 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 Organic Special will offset losses from the drop in Organic Special's long position.| Seoul Food vs. Neungyule Education | Seoul Food vs. Sangsin Energy Display | Seoul Food vs. FNC Entertainment Co | Seoul Food vs. SKONEC Entertainment Co |
| Organic Special vs. Samsung Electronics Co | Organic Special vs. Samsung Electronics Co | Organic Special vs. LG Energy Solution | Organic Special vs. SK Hynix |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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