Correlation Between Seohee Construction and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and Korean Drug 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 Korean Drug 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 Korean Drug Co, you can compare the effects of market volatilities on Seohee Construction and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and Korean Drug.
Diversification Opportunities for Seohee Construction and Korean Drug
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seohee and Korean is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Seohee Construction i.e., Seohee Construction and Korean Drug go up and down completely randomly.
Pair Corralation between Seohee Construction and Korean Drug
Assuming the 90 days trading horizon Seohee Construction Co is expected to under-perform the Korean Drug. In addition to that, Seohee Construction is 1.36 times more volatile than Korean Drug Co. It trades about -0.31 of its total potential returns per unit of risk. Korean Drug Co is currently generating about -0.32 per unit of volatility. If you would invest 499,000 in Korean Drug Co on November 6, 2024 and sell it today you would lose (20,500) from holding Korean Drug Co or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Seohee Construction Co vs. Korean Drug Co
Performance |
| Timeline |
| Seohee Construction |
| Korean Drug |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Seohee Construction and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and Korean Drug
The main advantage of trading using opposite Seohee Construction and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug'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 |
| Korean Drug vs. SAMG Entertainment Co | Korean Drug vs. SKONEC Entertainment Co | Korean Drug vs. Jeju Air Co | Korean Drug vs. Air Busan 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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