Correlation Between Seoul Electronics and Cho Bi
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Cho Bi 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 Seoul Electronics and Cho Bi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Electronics Telecom and Cho Bi Co, you can compare the effects of market volatilities on Seoul Electronics and Cho Bi 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 Seoul Electronics with a short position of Cho Bi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Cho Bi.
Diversification Opportunities for Seoul Electronics and Cho Bi
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Cho is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Cho Bi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cho Bi and Seoul Electronics 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 Seoul Electronics Telecom are associated (or correlated) with Cho Bi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cho Bi has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Cho Bi go up and down completely randomly.
Pair Corralation between Seoul Electronics and Cho Bi
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to under-perform the Cho Bi. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Electronics Telecom is 1.74 times less risky than Cho Bi. The stock trades about -0.34 of its potential returns per unit of risk. The Cho Bi Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,015,000 in Cho Bi Co on September 4, 2024 and sell it today you would lose (9,000) from holding Cho Bi Co or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Cho Bi Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Cho Bi |
Seoul Electronics and Cho Bi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Cho Bi
The main advantage of trading using opposite Seoul Electronics and Cho Bi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Cho Bi 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 Cho Bi will offset losses from the drop in Cho Bi's long position.| Seoul Electronics vs. Daol Investment Securities | Seoul Electronics vs. BGF Retail Co | Seoul Electronics vs. Coloray International Investment | Seoul Electronics vs. LB Investment |
| Cho Bi vs. Seoul Electronics Telecom | Cho Bi vs. Nable Communications | Cho Bi vs. Pungguk Ethanol Industrial | Cho Bi vs. Lotte Data Communication |
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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