Correlation Between Seohee Construction and Raontech
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and Raontech 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 Raontech 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 Raontech, you can compare the effects of market volatilities on Seohee Construction and Raontech 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 Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and Raontech.
Diversification Opportunities for Seohee Construction and Raontech
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seohee and Raontech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of Seohee Construction i.e., Seohee Construction and Raontech go up and down completely randomly.
Pair Corralation between Seohee Construction and Raontech
Assuming the 90 days trading horizon Seohee Construction Co is expected to generate 0.39 times more return on investment than Raontech. However, Seohee Construction Co is 2.59 times less risky than Raontech. It trades about -0.31 of its potential returns per unit of risk. Raontech is currently generating about -0.54 per unit of risk. If you would invest 163,700 in Seohee Construction Co on November 7, 2024 and sell it today you would lose (9,600) from holding Seohee Construction Co or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Seohee Construction Co vs. Raontech
Performance |
| Timeline |
| Seohee Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Raontech |
Seohee Construction and Raontech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and Raontech
The main advantage of trading using opposite Seohee Construction and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.| Seohee Construction vs. Koh Young Technology | Seohee Construction vs. Hana Financial | Seohee Construction vs. Samsung Securities |
| Raontech vs. TK Chemical | Raontech vs. ISU Chemical Co | Raontech vs. SH Energy Chemical | Raontech vs. Nasmedia 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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