Correlation Between Songwon Industrial and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Seoul 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 Songwon Industrial and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Seoul Electronics Telecom, you can compare the effects of market volatilities on Songwon Industrial and Seoul 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 Songwon Industrial with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Seoul Electronics.
Diversification Opportunities for Songwon Industrial and Seoul Electronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Songwon and Seoul is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom and Songwon Industrial 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 Songwon Industrial Co are associated (or correlated) with Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Seoul Electronics go up and down completely randomly.
Pair Corralation between Songwon Industrial and Seoul Electronics
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 0.91 times more return on investment than Seoul Electronics. However, Songwon Industrial Co is 1.1 times less risky than Seoul Electronics. It trades about -0.03 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.06 per unit of risk. If you would invest 1,839,192 in Songwon Industrial Co on November 7, 2024 and sell it today you would lose (679,192) from holding Songwon Industrial Co or give up 36.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Songwon Industrial |
| Seoul Electronics Telecom |
Songwon Industrial and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Seoul Electronics
The main advantage of trading using opposite Songwon Industrial and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Seoul 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| Songwon Industrial vs. AptaBio Therapeutics | Songwon Industrial vs. Daewoo SBI SPAC | Songwon Industrial vs. Dream Security co | Songwon Industrial vs. Microfriend |
| Seoul Electronics vs. Woori Technology Investment | Seoul Electronics vs. Alton Sports CoLtd | Seoul Electronics vs. SBI Investment KOREA | Seoul Electronics vs. EBEST Investment Securities |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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