Correlation Between Seohee Construction and RFTech
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and RFTech 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 RFTech 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 RFTech Co, you can compare the effects of market volatilities on Seohee Construction and RFTech 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 RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and RFTech.
Diversification Opportunities for Seohee Construction and RFTech
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seohee and RFTech is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech 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 RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Seohee Construction i.e., Seohee Construction and RFTech go up and down completely randomly.
Pair Corralation between Seohee Construction and RFTech
Assuming the 90 days trading horizon Seohee Construction is expected to generate 2.37 times less return on investment than RFTech. But when comparing it to its historical volatility, Seohee Construction Co is 1.36 times less risky than RFTech. It trades about 0.07 of its potential returns per unit of risk. RFTech Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 311,000 in RFTech Co on October 14, 2024 and sell it today you would earn a total of 59,000 from holding RFTech Co or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seohee Construction Co vs. RFTech Co
Performance |
| Timeline |
| Seohee Construction |
| RFTech |
Seohee Construction and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and RFTech
The main advantage of trading using opposite Seohee Construction and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech'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 |
| RFTech vs. Daehan Steel | RFTech vs. Hyundai Engineering Construction | RFTech vs. SeAH Besteel Corp | RFTech 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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