Correlation Between Seoul Electronics and Daol Investment
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Daol Investment 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 Daol Investment 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 Daol Investment Securities, you can compare the effects of market volatilities on Seoul Electronics and Daol Investment 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 Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Daol Investment.
Diversification Opportunities for Seoul Electronics and Daol Investment
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Seoul and Daol is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu 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 Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Daol Investment go up and down completely randomly.
Pair Corralation between Seoul Electronics and Daol Investment
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to under-perform the Daol Investment. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Electronics Telecom is 1.09 times less risky than Daol Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Daol Investment Securities is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 263,086 in Daol Investment Securities on September 12, 2024 and sell it today you would lose (13,586) from holding Daol Investment Securities or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Daol Investment Securities
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Daol Investment Secu |
Seoul Electronics and Daol Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Daol Investment
The main advantage of trading using opposite Seoul Electronics and Daol Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Daol Investment 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 Daol Investment will offset losses from the drop in Daol Investment's long position.| Seoul Electronics vs. KCC Engineering Construction | Seoul Electronics vs. KEPCO Engineering Construction | Seoul Electronics vs. Dongwoo Farm To | Seoul Electronics vs. Seoyon Topmetal Co |
| Daol Investment vs. Samsung Electronics Co | Daol Investment vs. Samsung Electronics Co | Daol Investment vs. LG Energy Solution | Daol Investment vs. SK Hynix |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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