Correlation Between Seoul Electronics and Seoyon Topmetal
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Seoyon Topmetal 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 Seoyon Topmetal 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 Seoyon Topmetal Co, you can compare the effects of market volatilities on Seoul Electronics and Seoyon Topmetal 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 Seoyon Topmetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Seoyon Topmetal.
Diversification Opportunities for Seoul Electronics and Seoyon Topmetal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Seoyon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Seoyon Topmetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoyon Topmetal 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 Seoyon Topmetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoyon Topmetal has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Seoyon Topmetal go up and down completely randomly.
Pair Corralation between Seoul Electronics and Seoyon Topmetal
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to under-perform the Seoyon Topmetal. In addition to that, Seoul Electronics is 1.32 times more volatile than Seoyon Topmetal Co. It trades about -0.06 of its total potential returns per unit of risk. Seoyon Topmetal Co is currently generating about -0.01 per unit of volatility. If you would invest 448,809 in Seoyon Topmetal Co on November 19, 2024 and sell it today you would lose (84,309) from holding Seoyon Topmetal Co or give up 18.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Seoyon Topmetal Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Seoyon Topmetal |
Seoul Electronics and Seoyon Topmetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Seoyon Topmetal
The main advantage of trading using opposite Seoul Electronics and Seoyon Topmetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Seoyon Topmetal 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 Seoyon Topmetal will offset losses from the drop in Seoyon Topmetal's long position.| Seoul Electronics vs. Formetal Co | Seoul Electronics vs. Innowireless Co | Seoul Electronics vs. Kyeryong Construction Industrial | Seoul Electronics vs. INFINITT Healthcare Co |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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