Correlation Between Korea Real and Seojin Automotive
Can any of the company-specific risk be diversified away by investing in both Korea Real and Seojin Automotive 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 Korea Real and Seojin Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and Seojin Automotive CoLtd, you can compare the effects of market volatilities on Korea Real and Seojin Automotive 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 Korea Real with a short position of Seojin Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Seojin Automotive.
Diversification Opportunities for Korea Real and Seojin Automotive
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Seojin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Seojin Automotive CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seojin Automotive CoLtd and Korea Real 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 Korea Real Estate are associated (or correlated) with Seojin Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seojin Automotive CoLtd has no effect on the direction of Korea Real i.e., Korea Real and Seojin Automotive go up and down completely randomly.
Pair Corralation between Korea Real and Seojin Automotive
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.37 times more return on investment than Seojin Automotive. However, Korea Real Estate is 2.67 times less risky than Seojin Automotive. It trades about -0.16 of its potential returns per unit of risk. Seojin Automotive CoLtd is currently generating about -0.35 per unit of risk. If you would invest 103,900 in Korea Real Estate on September 4, 2024 and sell it today you would lose (2,700) from holding Korea Real Estate or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Seojin Automotive CoLtd
Performance |
| Timeline |
| Korea Real Estate |
| Seojin Automotive CoLtd |
Korea Real and Seojin Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Seojin Automotive
The main advantage of trading using opposite Korea Real and Seojin Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Seojin Automotive 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 Seojin Automotive will offset losses from the drop in Seojin Automotive's long position.| Korea Real vs. JYP Entertainment Corp | Korea Real vs. SKONEC Entertainment Co | Korea Real vs. GS Engineering Construction | Korea Real vs. KEPCO Engineering Construction |
| Seojin Automotive vs. Korea Real Estate | Seojin Automotive vs. Busan Industrial Co | Seojin Automotive vs. UNISEM Co | Seojin Automotive vs. RPBio Inc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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