Correlation Between ISU Chemical and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both ISU Chemical and Solution Advanced 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 ISU Chemical and Solution Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ISU Chemical Co and Solution Advanced Technology, you can compare the effects of market volatilities on ISU Chemical and Solution Advanced 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 ISU Chemical with a short position of Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISU Chemical and Solution Advanced.
Diversification Opportunities for ISU Chemical and Solution Advanced
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ISU and Solution is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ISU Chemical Co and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced and ISU Chemical 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 ISU Chemical Co are associated (or correlated) with Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of ISU Chemical i.e., ISU Chemical and Solution Advanced go up and down completely randomly.
Pair Corralation between ISU Chemical and Solution Advanced
Assuming the 90 days trading horizon ISU Chemical Co is expected to under-perform the Solution Advanced. In addition to that, ISU Chemical is 1.01 times more volatile than Solution Advanced Technology. It trades about -0.24 of its total potential returns per unit of risk. Solution Advanced Technology is currently generating about 0.06 per unit of volatility. If you would invest 136,900 in Solution Advanced Technology on September 13, 2024 and sell it today you would earn a total of 4,500 from holding Solution Advanced Technology or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ISU Chemical Co vs. Solution Advanced Technology
Performance |
| Timeline |
| ISU Chemical |
| Solution Advanced |
ISU Chemical and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ISU Chemical and Solution Advanced
The main advantage of trading using opposite ISU Chemical and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISU Chemical position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| ISU Chemical vs. Atinum Investment Co | ISU Chemical vs. CJ Seafood Corp | ISU Chemical vs. KTB Investment Securities | ISU Chemical vs. Daol Investment Securities |
| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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