Correlation Between Kyung Chang and Seoul Semiconductor
Can any of the company-specific risk be diversified away by investing in both Kyung Chang 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 Kyung Chang and Seoul Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kyung Chang Industrial and Seoul Semiconductor Co, you can compare the effects of market volatilities on Kyung Chang 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 Kyung Chang with a short position of Seoul Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and Seoul Semiconductor.
Diversification Opportunities for Kyung Chang and Seoul Semiconductor
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kyung and Seoul is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and Seoul Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Semiconductor and Kyung Chang 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 Kyung Chang Industrial 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 Kyung Chang i.e., Kyung Chang and Seoul Semiconductor go up and down completely randomly.
Pair Corralation between Kyung Chang and Seoul Semiconductor
Assuming the 90 days trading horizon Kyung Chang Industrial is expected to generate 1.62 times more return on investment than Seoul Semiconductor. However, Kyung Chang is 1.62 times more volatile than Seoul Semiconductor Co. It trades about 0.0 of its potential returns per unit of risk. Seoul Semiconductor Co is currently generating about -0.05 per unit of risk. If you would invest 230,500 in Kyung Chang Industrial on September 4, 2024 and sell it today you would lose (34,800) from holding Kyung Chang Industrial or give up 15.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kyung Chang Industrial vs. Seoul Semiconductor Co
Performance |
| Timeline |
| Kyung Chang Industrial |
| Seoul Semiconductor |
Kyung Chang and Seoul Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyung Chang and Seoul Semiconductor
The main advantage of trading using opposite Kyung Chang and Seoul Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang 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.| Kyung Chang vs. Shinil Electronics Co | Kyung Chang vs. Korean Reinsurance Co | Kyung Chang vs. Daejoo Electronic Materials | Kyung Chang vs. Samyoung Electronics Co |
| Seoul Semiconductor vs. Dongsin Engineering Construction | Seoul Semiconductor vs. Doosan Fuel Cell | Seoul Semiconductor vs. Daishin Balance 1 | Seoul Semiconductor vs. Total Soft Bank |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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