Correlation Between Korea Shipbuilding and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Korea Shipbuilding and Seoul Food 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 Korea Shipbuilding and Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Shipbuilding Offshore and Seoul Food Industrial, you can compare the effects of market volatilities on Korea Shipbuilding and Seoul Food 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 Korea Shipbuilding with a short position of Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Shipbuilding and Seoul Food.
Diversification Opportunities for Korea Shipbuilding and Seoul Food
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Seoul is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Korea Shipbuilding Offshore and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial and Korea Shipbuilding 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 Korea Shipbuilding Offshore are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Korea Shipbuilding i.e., Korea Shipbuilding and Seoul Food go up and down completely randomly.
Pair Corralation between Korea Shipbuilding and Seoul Food
Assuming the 90 days trading horizon Korea Shipbuilding Offshore is expected to generate 1.81 times more return on investment than Seoul Food. However, Korea Shipbuilding is 1.81 times more volatile than Seoul Food Industrial. It trades about 0.11 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.04 per unit of risk. If you would invest 7,620,000 in Korea Shipbuilding Offshore on October 14, 2024 and sell it today you would earn a total of 16,380,000 from holding Korea Shipbuilding Offshore or generate 214.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Shipbuilding Offshore vs. Seoul Food Industrial
Performance |
| Timeline |
| Korea Shipbuilding |
| Seoul Food Industrial |
Korea Shipbuilding and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Shipbuilding and Seoul Food
The main advantage of trading using opposite Korea Shipbuilding and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Shipbuilding position performs unexpectedly, Seoul Food 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 Food will offset losses from the drop in Seoul Food's long position.| Korea Shipbuilding vs. Daewon Chemical Co | Korea Shipbuilding vs. Youl Chon Chemical | Korea Shipbuilding vs. Kyung In Synthetic Corp | Korea Shipbuilding vs. Sung Bo Chemicals |
| Seoul Food vs. Digital Imaging Technology | Seoul Food vs. HB Technology TD | Seoul Food vs. Ssangyong Materials Corp | Seoul Food vs. Korea Shipbuilding Offshore |
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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