Correlation Between Seoul Electronics and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Sejong Telecom 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 Sejong Telecom 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 Sejong Telecom, you can compare the effects of market volatilities on Seoul Electronics and Sejong Telecom 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 Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Sejong Telecom.
Diversification Opportunities for Seoul Electronics and Sejong Telecom
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and Sejong is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom 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 Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Sejong Telecom go up and down completely randomly.
Pair Corralation between Seoul Electronics and Sejong Telecom
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 10.12 times more return on investment than Sejong Telecom. However, Seoul Electronics is 10.12 times more volatile than Sejong Telecom. It trades about 0.11 of its potential returns per unit of risk. Sejong Telecom is currently generating about 0.29 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Sejong Telecom
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Sejong Telecom |
Seoul Electronics and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Sejong Telecom
The main advantage of trading using opposite Seoul Electronics and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom'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 |
| Sejong Telecom vs. Sam Chun Dang | Sejong Telecom vs. SAMRYOONG CoLtd | Sejong Telecom vs. BYON Co | Sejong Telecom vs. Sangsangin 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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