Correlation Between Seohee Construction and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and Samsung Life 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 Samsung Life 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 Samsung Life, you can compare the effects of market volatilities on Seohee Construction and Samsung Life 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 Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and Samsung Life.
Diversification Opportunities for Seohee Construction and Samsung Life
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seohee and Samsung is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of Seohee Construction i.e., Seohee Construction and Samsung Life go up and down completely randomly.
Pair Corralation between Seohee Construction and Samsung Life
Assuming the 90 days trading horizon Seohee Construction is expected to generate 1.75 times less return on investment than Samsung Life. But when comparing it to its historical volatility, Seohee Construction Co is 1.28 times less risky than Samsung Life. It trades about 0.04 of its potential returns per unit of risk. Samsung Life is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,050,000 in Samsung Life on September 3, 2024 and sell it today you would earn a total of 660,000 from holding Samsung Life or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seohee Construction Co vs. Samsung Life
Performance |
| Timeline |
| Seohee Construction |
| Samsung Life |
Seohee Construction and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and Samsung Life
The main advantage of trading using opposite Seohee Construction and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, Samsung Life 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 Samsung Life will offset losses from the drop in Samsung Life's long position.| Seohee Construction vs. LG Display | Seohee Construction vs. Hyundai Motor | Seohee Construction vs. Hyundai Motor Co | Seohee Construction vs. Hyundai Motor Co |
| Samsung Life vs. Dongil Metal Co | Samsung Life vs. Tuksu Engineering ConstructionLtd | Samsung Life vs. Daiyang Metal Co | Samsung Life vs. Seohee Construction 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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