Correlation Between Seoul Electronics and Taegu Broadcasting
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Taegu Broadcasting 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 Taegu Broadcasting 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 Taegu Broadcasting, you can compare the effects of market volatilities on Seoul Electronics and Taegu Broadcasting 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 Taegu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Taegu Broadcasting.
Diversification Opportunities for Seoul Electronics and Taegu Broadcasting
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seoul and Taegu is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Taegu Broadcasting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taegu Broadcasting 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 Taegu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taegu Broadcasting has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Taegu Broadcasting go up and down completely randomly.
Pair Corralation between Seoul Electronics and Taegu Broadcasting
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 4.0 times more return on investment than Taegu Broadcasting. However, Seoul Electronics is 4.0 times more volatile than Taegu Broadcasting. It trades about 0.11 of its potential returns per unit of risk. Taegu Broadcasting is currently generating about 0.03 per unit of risk. If you would invest 23,800 in Seoul Electronics Telecom on November 27, 2024 and sell it today you would earn a total of 2,600 from holding Seoul Electronics Telecom or generate 10.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Taegu Broadcasting
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Taegu Broadcasting |
Seoul Electronics and Taegu Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Taegu Broadcasting
The main advantage of trading using opposite Seoul Electronics and Taegu Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Taegu Broadcasting 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 Taegu Broadcasting will offset losses from the drop in Taegu Broadcasting's long position.| Seoul Electronics vs. Seoul Semiconductor Co | Seoul Electronics vs. Hanmi Semiconductor Co | Seoul Electronics vs. Tway Air Co | Seoul Electronics vs. Cloud Air CoLtd |
| Taegu Broadcasting vs. Samji Electronics Co | Taegu Broadcasting vs. Sungmoon Electronics Co | Taegu Broadcasting vs. Samwha Electronics Co | Taegu Broadcasting vs. Daejung Chemicals Metals |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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