Correlation Between Seohee Construction and DB HiTek
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and DB HiTek 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 Seohee Construction and DB HiTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seohee Construction Co and DB HiTek Co, you can compare the effects of market volatilities on Seohee Construction and DB HiTek 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 Seohee Construction with a short position of DB HiTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and DB HiTek.
Diversification Opportunities for Seohee Construction and DB HiTek
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seohee and 000990 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and DB HiTek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB HiTek and Seohee Construction 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 Seohee Construction Co are associated (or correlated) with DB HiTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB HiTek has no effect on the direction of Seohee Construction i.e., Seohee Construction and DB HiTek go up and down completely randomly.
Pair Corralation between Seohee Construction and DB HiTek
Assuming the 90 days trading horizon Seohee Construction Co is expected to under-perform the DB HiTek. But the stock apears to be less risky and, when comparing its historical volatility, Seohee Construction Co is 1.4 times less risky than DB HiTek. The stock trades about -0.15 of its potential returns per unit of risk. The DB HiTek Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,395,000 in DB HiTek Co on October 25, 2024 and sell it today you would lose (40,000) from holding DB HiTek Co or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Seohee Construction Co vs. DB HiTek Co
Performance |
| Timeline |
| Seohee Construction |
| DB HiTek |
Seohee Construction and DB HiTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and DB HiTek
The main advantage of trading using opposite Seohee Construction and DB HiTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, DB HiTek 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 DB HiTek will offset losses from the drop in DB HiTek's long position.| Seohee Construction vs. KCC Engineering Construction | Seohee Construction vs. Samchuly Bicycle Co | Seohee Construction vs. SFA Engineering | Seohee Construction vs. SEOHAN Const EngcoLtd |
| DB HiTek vs. Samyang Foods Co | DB HiTek vs. Digital Imaging Technology | DB HiTek vs. Daelim Trading Co | DB HiTek vs. DB Financial Investment |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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