Correlation Between Seoul Electronics and Narae Nanotech
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Narae Nanotech 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 Narae Nanotech 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 Narae Nanotech Corp, you can compare the effects of market volatilities on Seoul Electronics and Narae Nanotech 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 Narae Nanotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Narae Nanotech.
Diversification Opportunities for Seoul Electronics and Narae Nanotech
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seoul and Narae is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Narae Nanotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Narae Nanotech Corp 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 Narae Nanotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Narae Nanotech Corp has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Narae Nanotech go up and down completely randomly.
Pair Corralation between Seoul Electronics and Narae Nanotech
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 0.49 times more return on investment than Narae Nanotech. However, Seoul Electronics Telecom is 2.02 times less risky than Narae Nanotech. It trades about 0.47 of its potential returns per unit of risk. Narae Nanotech Corp is currently generating about 0.13 per unit of risk. If you would invest 21,700 in Seoul Electronics Telecom on October 12, 2024 and sell it today you would earn a total of 5,200 from holding Seoul Electronics Telecom or generate 23.96% 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. Narae Nanotech Corp
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Narae Nanotech Corp |
Seoul Electronics and Narae Nanotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Narae Nanotech
The main advantage of trading using opposite Seoul Electronics and Narae Nanotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Narae Nanotech 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 Narae Nanotech will offset losses from the drop in Narae Nanotech's long position.| Seoul Electronics vs. Amogreentech Co | Seoul Electronics vs. Narae Nanotech Corp | Seoul Electronics vs. HB Technology TD | Seoul Electronics vs. Samsung Publishing Co |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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