Correlation Between Ssangyong Information and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Ssangyong Information 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 Ssangyong Information and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Information Communication and Seoul Electronics Telecom, you can compare the effects of market volatilities on Ssangyong Information 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 Ssangyong Information with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and Seoul Electronics.
Diversification Opportunities for Ssangyong Information and Seoul Electronics
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ssangyong and Seoul is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic 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 Ssangyong Information 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 Ssangyong Information Communication 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 Ssangyong Information i.e., Ssangyong Information and Seoul Electronics go up and down completely randomly.
Pair Corralation between Ssangyong Information and Seoul Electronics
Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the Seoul Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 2.25 times less risky than Seoul Electronics. The stock trades about -0.14 of its potential returns per unit of risk. The Seoul Electronics Telecom is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 40,600 in Seoul Electronics Telecom on August 27, 2024 and sell it today you would lose (15,300) from holding Seoul Electronics Telecom or give up 37.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Information Communic vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Ssangyong Information |
| Seoul Electronics Telecom |
Ssangyong Information and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Information and Seoul Electronics
The main advantage of trading using opposite Ssangyong Information and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Information 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.| Ssangyong Information vs. Lotte Energy Materials | Ssangyong Information vs. RF Materials Co | Ssangyong Information vs. Ecoplastic | Ssangyong Information vs. Top Material Co |
| Seoul Electronics vs. Atinum Investment Co | Seoul Electronics vs. Lotte Chilsung Beverage | Seoul Electronics vs. Daol Investment Securities | Seoul Electronics vs. ABOV Semiconductor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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