Correlation Between Heungkuk Metaltech and Seoul Semiconductor
Can any of the company-specific risk be diversified away by investing in both Heungkuk Metaltech and Seoul Semiconductor 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 Heungkuk Metaltech and Seoul Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and Seoul Semiconductor Co, you can compare the effects of market volatilities on Heungkuk Metaltech and Seoul Semiconductor 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 Heungkuk Metaltech with a short position of Seoul Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and Seoul Semiconductor.
Diversification Opportunities for Heungkuk Metaltech and Seoul Semiconductor
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heungkuk and Seoul is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Seoul Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Semiconductor and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with Seoul Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Semiconductor has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Seoul Semiconductor go up and down completely randomly.
Pair Corralation between Heungkuk Metaltech and Seoul Semiconductor
Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 0.55 times more return on investment than Seoul Semiconductor. However, Heungkuk Metaltech CoLtd is 1.82 times less risky than Seoul Semiconductor. It trades about -0.05 of its potential returns per unit of risk. Seoul Semiconductor Co is currently generating about -0.43 per unit of risk. If you would invest 491,000 in Heungkuk Metaltech CoLtd on August 29, 2024 and sell it today you would lose (8,000) from holding Heungkuk Metaltech CoLtd or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heungkuk Metaltech CoLtd vs. Seoul Semiconductor Co
Performance |
| Timeline |
| Heungkuk Metaltech CoLtd |
| Seoul Semiconductor |
Heungkuk Metaltech and Seoul Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heungkuk Metaltech and Seoul Semiconductor
The main advantage of trading using opposite Heungkuk Metaltech and Seoul Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heungkuk Metaltech position performs unexpectedly, Seoul Semiconductor 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 Semiconductor will offset losses from the drop in Seoul Semiconductor's long position.| Heungkuk Metaltech vs. Daishin Information Communications | Heungkuk Metaltech vs. Lotte Data Communication | Heungkuk Metaltech vs. Mobile Appliance | Heungkuk Metaltech vs. Korea Information Communications |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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