Correlation Between Seoul Broadcasting and OptiPharm
Can any of the company-specific risk be diversified away by investing in both Seoul Broadcasting and OptiPharm 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 Broadcasting and OptiPharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Broadcasting System and OptiPharm Co, you can compare the effects of market volatilities on Seoul Broadcasting and OptiPharm 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 Broadcasting with a short position of OptiPharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Broadcasting and OptiPharm.
Diversification Opportunities for Seoul Broadcasting and OptiPharm
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and OptiPharm is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Broadcasting System and OptiPharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiPharm and Seoul Broadcasting 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 Broadcasting System are associated (or correlated) with OptiPharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiPharm has no effect on the direction of Seoul Broadcasting i.e., Seoul Broadcasting and OptiPharm go up and down completely randomly.
Pair Corralation between Seoul Broadcasting and OptiPharm
Assuming the 90 days trading horizon Seoul Broadcasting System is expected to under-perform the OptiPharm. In addition to that, Seoul Broadcasting is 1.65 times more volatile than OptiPharm Co. It trades about -0.05 of its total potential returns per unit of risk. OptiPharm Co is currently generating about -0.05 per unit of volatility. If you would invest 758,000 in OptiPharm Co on September 14, 2024 and sell it today you would lose (285,000) from holding OptiPharm Co or give up 37.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Seoul Broadcasting System vs. OptiPharm Co
Performance |
| Timeline |
| Seoul Broadcasting System |
| OptiPharm |
Seoul Broadcasting and OptiPharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Broadcasting and OptiPharm
The main advantage of trading using opposite Seoul Broadcasting and OptiPharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Broadcasting position performs unexpectedly, OptiPharm 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 OptiPharm will offset losses from the drop in OptiPharm's long position.| Seoul Broadcasting vs. YG Entertainment | Seoul Broadcasting vs. JYP Entertainment | Seoul Broadcasting vs. Cube Entertainment | Seoul Broadcasting vs. FNC Entertainment Co |
| OptiPharm vs. Seoul Broadcasting System | OptiPharm vs. INFINITT Healthcare Co | OptiPharm vs. DB Financial Investment | OptiPharm vs. LG Household Healthcare |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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