Correlation Between Seohee Construction and SFA Engineering
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and SFA Engineering 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 SFA Engineering 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 SFA Engineering, you can compare the effects of market volatilities on Seohee Construction and SFA Engineering 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 SFA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and SFA Engineering.
Diversification Opportunities for Seohee Construction and SFA Engineering
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seohee and SFA is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering 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 SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of Seohee Construction i.e., Seohee Construction and SFA Engineering go up and down completely randomly.
Pair Corralation between Seohee Construction and SFA Engineering
Assuming the 90 days trading horizon Seohee Construction Co is expected to generate 0.83 times more return on investment than SFA Engineering. However, Seohee Construction Co is 1.2 times less risky than SFA Engineering. It trades about 0.03 of its potential returns per unit of risk. SFA Engineering is currently generating about -0.05 per unit of risk. If you would invest 121,241 in Seohee Construction Co on August 27, 2024 and sell it today you would earn a total of 19,659 from holding Seohee Construction Co or generate 16.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seohee Construction Co vs. SFA Engineering
Performance |
| Timeline |
| Seohee Construction |
| SFA Engineering |
Seohee Construction and SFA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and SFA Engineering
The main advantage of trading using opposite Seohee Construction and SFA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, SFA Engineering 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 SFA Engineering will offset losses from the drop in SFA Engineering'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 |
| SFA Engineering vs. Korea Real Estate | SFA Engineering vs. Korea Ratings Co | SFA Engineering vs. IQuest Co | SFA Engineering vs. Wonbang Tech 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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