Correlation Between Seoul Electronics and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Dongil 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 Dongil 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 Dongil Metal Co, you can compare the effects of market volatilities on Seoul Electronics and Dongil 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 Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Dongil Metal.
Diversification Opportunities for Seoul Electronics and Dongil Metal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and Dongil is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Dongil Metal go up and down completely randomly.
Pair Corralation between Seoul Electronics and Dongil Metal
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 1.84 times more return on investment than Dongil Metal. However, Seoul Electronics is 1.84 times more volatile than Dongil Metal Co. It trades about 0.42 of its potential returns per unit of risk. Dongil Metal Co is currently generating about 0.18 per unit of risk. If you would invest 21,800 in Seoul Electronics Telecom on October 13, 2024 and sell it today you would earn a total of 4,700 from holding Seoul Electronics Telecom or generate 21.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Dongil Metal Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Dongil Metal |
Seoul Electronics and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Dongil Metal
The main advantage of trading using opposite Seoul Electronics and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Dongil 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 Dongil Metal will offset losses from the drop in Dongil Metal's long position.| Seoul Electronics vs. Hanjin Transportation Co | Seoul Electronics vs. Shinhan Inverse Copper | Seoul Electronics vs. Formetal Co | Seoul Electronics vs. Taegu Broadcasting |
| Dongil Metal vs. Inzi Display CoLtd | Dongil Metal vs. Innowireless Co | Dongil Metal vs. Nable Communications | Dongil Metal vs. Seoul Electronics Telecom |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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