Correlation Between Seoul Electronics and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Phoenix Materials 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 Phoenix Materials 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 Phoenix Materials Co, you can compare the effects of market volatilities on Seoul Electronics and Phoenix Materials 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 Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Phoenix Materials.
Diversification Opportunities for Seoul Electronics and Phoenix Materials
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Phoenix is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials 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 Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Phoenix Materials go up and down completely randomly.
Pair Corralation between Seoul Electronics and Phoenix Materials
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 0.36 times more return on investment than Phoenix Materials. However, Seoul Electronics Telecom is 2.79 times less risky than Phoenix Materials. It trades about -0.34 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.14 per unit of risk. If you would invest 26,700 in Seoul Electronics Telecom on August 31, 2024 and sell it today you would lose (3,000) from holding Seoul Electronics Telecom or give up 11.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Phoenix Materials Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Phoenix Materials |
Seoul Electronics and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Phoenix Materials
The main advantage of trading using opposite Seoul Electronics and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Phoenix Materials 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' long position.| Seoul Electronics vs. Korea New Network | Seoul Electronics vs. ICD Co | Seoul Electronics vs. DYPNF CoLtd | Seoul Electronics vs. Busan Industrial Co |
| Phoenix Materials vs. Dongsin Engineering Construction | Phoenix Materials vs. Doosan Fuel Cell | Phoenix Materials vs. Daishin Balance 1 | Phoenix Materials vs. Total Soft Bank |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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