Correlation Between Seoul Electronics and Air Busan
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Air Busan 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 Air Busan 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 Air Busan Co, you can compare the effects of market volatilities on Seoul Electronics and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Air Busan.
Diversification Opportunities for Seoul Electronics and Air Busan
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and Air is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Air Busan go up and down completely randomly.
Pair Corralation between Seoul Electronics and Air Busan
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 2.25 times more return on investment than Air Busan. However, Seoul Electronics is 2.25 times more volatile than Air Busan Co. It trades about 0.27 of its potential returns per unit of risk. Air Busan Co is currently generating about 0.14 per unit of risk. If you would invest 22,400 in Seoul Electronics Telecom on October 24, 2024 and sell it today you would earn a total of 3,100 from holding Seoul Electronics Telecom or generate 13.84% 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. Air Busan Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Air Busan |
Seoul Electronics and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Air Busan
The main advantage of trading using opposite Seoul Electronics and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.| Seoul Electronics vs. Humasis Co | Seoul Electronics vs. Access Bio | Seoul Electronics vs. Taewoong Logistics CoLtd | Seoul Electronics vs. Hana Financial 7 |
| Air Busan vs. Kukil Metal Co | Air Busan vs. Duksan Hi Metal | Air Busan vs. Seoul Electronics Telecom | Air Busan vs. Hyundai Industrial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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