Correlation Between Seoul Electronics and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Korean Reinsurance 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 Korean Reinsurance 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 Korean Reinsurance Co, you can compare the effects of market volatilities on Seoul Electronics and Korean Reinsurance 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 Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Korean Reinsurance.
Diversification Opportunities for Seoul Electronics and Korean Reinsurance
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seoul and Korean is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance 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 Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Seoul Electronics and Korean Reinsurance
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 1.8 times more return on investment than Korean Reinsurance. However, Seoul Electronics is 1.8 times more volatile than Korean Reinsurance Co. It trades about 0.38 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.07 per unit of risk. If you would invest 22,200 in Seoul Electronics Telecom on October 14, 2024 and sell it today you would earn a total of 4,300 from holding Seoul Electronics Telecom or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Korean Reinsurance Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Korean Reinsurance |
Seoul Electronics and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Korean Reinsurance
The main advantage of trading using opposite Seoul Electronics and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Seoul Electronics vs. Kbi Metal Co | Seoul Electronics vs. Shinil Electronics Co | Seoul Electronics vs. Daeduck Electronics Co | Seoul Electronics vs. Korea Electronic Certification |
| Korean Reinsurance vs. Seoul Electronics Telecom | Korean Reinsurance vs. Sangsangin Investment Securities | Korean Reinsurance vs. Jinro Distillers Co | Korean Reinsurance vs. Korea Investment Holdings |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |