Correlation Between Tae Kyung and Seah Steel
Can any of the company-specific risk be diversified away by investing in both Tae Kyung and Seah Steel 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 Tae Kyung and Seah Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and Seah Steel Corp, you can compare the effects of market volatilities on Tae Kyung and Seah Steel 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 Tae Kyung with a short position of Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Seah Steel.
Diversification Opportunities for Tae Kyung and Seah Steel
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tae and Seah is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of Tae Kyung i.e., Tae Kyung and Seah Steel go up and down completely randomly.
Pair Corralation between Tae Kyung and Seah Steel
Assuming the 90 days trading horizon Tae Kyung Chemical is expected to under-perform the Seah Steel. In addition to that, Tae Kyung is 1.02 times more volatile than Seah Steel Corp. It trades about 0.0 of its total potential returns per unit of risk. Seah Steel Corp is currently generating about 0.02 per unit of volatility. If you would invest 13,840,000 in Seah Steel Corp on November 27, 2024 and sell it today you would earn a total of 1,800,000 from holding Seah Steel Corp or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tae Kyung Chemical vs. Seah Steel Corp
Performance |
| Timeline |
| Tae Kyung Chemical |
| Seah Steel Corp |
Tae Kyung and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and Seah Steel
The main advantage of trading using opposite Tae Kyung and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel's long position.| Tae Kyung vs. Innowireless Co | Tae Kyung vs. Dongnam Chemical Co | Tae Kyung vs. Silicon2 Co | Tae Kyung vs. Lotte Data Communication |
| Seah Steel vs. Young Heung Iron | Seah Steel vs. Samsung Electronics Co | Seah Steel vs. Sungmoon Electronics Co | Seah Steel vs. Dongil Steel 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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