Correlation Between Seohee Construction and NOVATECH
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and NOVATECH 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 NOVATECH 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 NOVATECH Co, you can compare the effects of market volatilities on Seohee Construction and NOVATECH 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 NOVATECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and NOVATECH.
Diversification Opportunities for Seohee Construction and NOVATECH
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seohee and NOVATECH is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and NOVATECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVATECH 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 NOVATECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVATECH has no effect on the direction of Seohee Construction i.e., Seohee Construction and NOVATECH go up and down completely randomly.
Pair Corralation between Seohee Construction and NOVATECH
Assuming the 90 days trading horizon Seohee Construction Co is expected to generate 0.46 times more return on investment than NOVATECH. However, Seohee Construction Co is 2.16 times less risky than NOVATECH. It trades about 0.08 of its potential returns per unit of risk. NOVATECH Co is currently generating about -0.02 per unit of risk. If you would invest 122,400 in Seohee Construction Co on October 20, 2024 and sell it today you would earn a total of 37,900 from holding Seohee Construction Co or generate 30.96% 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. NOVATECH Co
Performance |
| Timeline |
| Seohee Construction |
| NOVATECH |
Seohee Construction and NOVATECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and NOVATECH
The main advantage of trading using opposite Seohee Construction and NOVATECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, NOVATECH 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 NOVATECH will offset losses from the drop in NOVATECH'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 |
| NOVATECH vs. Hanshin Construction Co | NOVATECH vs. A Tech Solution Co | NOVATECH vs. Seohee Construction Co | NOVATECH vs. Woorim Machinery 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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