Correlation Between Seoul Electronics and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Kbi Metal 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 Kbi Metal 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 Kbi Metal Co, you can compare the effects of market volatilities on Seoul Electronics and Kbi Metal 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 Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Kbi Metal.
Diversification Opportunities for Seoul Electronics and Kbi Metal
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Kbi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal 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 Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Kbi Metal go up and down completely randomly.
Pair Corralation between Seoul Electronics and Kbi Metal
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 1.09 times more return on investment than Kbi Metal. However, Seoul Electronics is 1.09 times more volatile than Kbi Metal Co. It trades about -0.05 of its potential returns per unit of risk. Kbi Metal Co is currently generating about -0.14 per unit of risk. If you would invest 29,900 in Seoul Electronics Telecom on August 28, 2024 and sell it today you would lose (4,600) from holding Seoul Electronics Telecom or give up 15.38% 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. Kbi Metal Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Kbi Metal |
Seoul Electronics and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Kbi Metal
The main advantage of trading using opposite Seoul Electronics and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Kbi Metal 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 Kbi Metal will offset losses from the drop in Kbi Metal's long position.| Seoul Electronics vs. Nh Investment And | Seoul Electronics vs. Mobile Appliance | Seoul Electronics vs. TS Investment Corp | Seoul Electronics vs. Sangsangin Investment Securities |
| Kbi Metal vs. Busan Industrial Co | Kbi Metal vs. Busan Ind | Kbi Metal vs. Mirae Asset Daewoo | Kbi Metal vs. UNISEM Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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