Correlation Between Sejong Industrial and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Sejong Industrial and Kumho 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 Sejong Industrial and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Industrial and Kumho Industrial Co, you can compare the effects of market volatilities on Sejong Industrial and Kumho 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 Sejong Industrial with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Industrial and Kumho Industrial.
Diversification Opportunities for Sejong Industrial and Kumho Industrial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sejong and Kumho is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Industrial and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Sejong Industrial 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 Sejong Industrial are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Sejong Industrial i.e., Sejong Industrial and Kumho Industrial go up and down completely randomly.
Pair Corralation between Sejong Industrial and Kumho Industrial
Assuming the 90 days trading horizon Sejong Industrial is expected to generate 1.12 times more return on investment than Kumho Industrial. However, Sejong Industrial is 1.12 times more volatile than Kumho Industrial Co. It trades about -0.02 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.07 per unit of risk. If you would invest 573,913 in Sejong Industrial on September 2, 2024 and sell it today you would lose (158,913) from holding Sejong Industrial or give up 27.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejong Industrial vs. Kumho Industrial Co
Performance |
| Timeline |
| Sejong Industrial |
| Kumho Industrial |
Sejong Industrial and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Industrial and Kumho Industrial
The main advantage of trading using opposite Sejong Industrial and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Industrial position performs unexpectedly, Kumho 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Sejong Industrial vs. LG Display | Sejong Industrial vs. Hyundai Motor Co | Sejong Industrial vs. Hyundai Motor Co | Sejong Industrial vs. Adaptive Plasma Technology |
| Kumho Industrial vs. AptaBio Therapeutics | Kumho Industrial vs. Daewoo SBI SPAC | Kumho Industrial vs. Dream Security co | Kumho Industrial vs. Microfriend |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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