Correlation Between Seoul Electronics and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Seoul Electronics and Cheryong Industrial 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 Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Cheryong Industrial.
Diversification Opportunities for Seoul Electronics and Cheryong Industrial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and Cheryong is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd 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 Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Seoul Electronics and Cheryong Industrial
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to under-perform the Cheryong Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Electronics Telecom is 1.59 times less risky than Cheryong Industrial. The stock trades about -0.06 of its potential returns per unit of risk. The Cheryong Industrial CoLtd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 313,145 in Cheryong Industrial CoLtd on November 19, 2024 and sell it today you would earn a total of 314,855 from holding Cheryong Industrial CoLtd or generate 100.55% 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. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Cheryong Industrial CoLtd |
Seoul Electronics and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Cheryong Industrial
The main advantage of trading using opposite Seoul Electronics and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's long position.| Seoul Electronics vs. Formetal Co | Seoul Electronics vs. Innowireless Co | Seoul Electronics vs. Kyeryong Construction Industrial | Seoul Electronics vs. INFINITT Healthcare Co |
| Cheryong Industrial vs. Lotte Rental Co | Cheryong Industrial vs. Youngsin Metal Industrial | Cheryong Industrial vs. MetaLabs Co | Cheryong Industrial vs. Dongil Metal 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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