Correlation Between Seoyon Topmetal and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Seoyon Topmetal and Dongnam Chemical 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 Seoyon Topmetal and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoyon Topmetal Co and Dongnam Chemical Co, you can compare the effects of market volatilities on Seoyon Topmetal and Dongnam Chemical 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 Seoyon Topmetal with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoyon Topmetal and Dongnam Chemical.
Diversification Opportunities for Seoyon Topmetal and Dongnam Chemical
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seoyon and Dongnam is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Seoyon Topmetal Co and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and Seoyon Topmetal 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 Seoyon Topmetal Co are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Seoyon Topmetal i.e., Seoyon Topmetal and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Seoyon Topmetal and Dongnam Chemical
Assuming the 90 days trading horizon Seoyon Topmetal Co is expected to generate 1.68 times more return on investment than Dongnam Chemical. However, Seoyon Topmetal is 1.68 times more volatile than Dongnam Chemical Co. It trades about -0.01 of its potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.05 per unit of risk. If you would invest 464,148 in Seoyon Topmetal Co on October 14, 2024 and sell it today you would lose (104,148) from holding Seoyon Topmetal Co or give up 22.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoyon Topmetal Co vs. Dongnam Chemical Co
Performance |
| Timeline |
| Seoyon Topmetal |
| Dongnam Chemical |
Seoyon Topmetal and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoyon Topmetal and Dongnam Chemical
The main advantage of trading using opposite Seoyon Topmetal and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoyon Topmetal position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| Seoyon Topmetal vs. Samyang Foods Co | Seoyon Topmetal vs. Seoul Food Industrial | Seoyon Topmetal vs. DB Financial Investment | Seoyon Topmetal vs. ITM Semiconductor Co |
| Dongnam Chemical vs. Shinil Industrial Co | Dongnam Chemical vs. DRB Industrial Co | Dongnam Chemical vs. Seoyon Topmetal Co | Dongnam Chemical vs. Nh Investment And |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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