Correlation Between Sejong Telecom and HMM
Can any of the company-specific risk be diversified away by investing in both Sejong Telecom and HMM 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 Sejong Telecom and HMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Telecom and HMM Co, you can compare the effects of market volatilities on Sejong Telecom and HMM 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 Sejong Telecom with a short position of HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Telecom and HMM.
Diversification Opportunities for Sejong Telecom and HMM
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sejong and HMM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co and Sejong Telecom 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 Sejong Telecom are associated (or correlated) with HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and HMM go up and down completely randomly.
Pair Corralation between Sejong Telecom and HMM
Assuming the 90 days trading horizon Sejong Telecom is expected to generate 0.13 times more return on investment than HMM. However, Sejong Telecom is 7.86 times less risky than HMM. It trades about -0.28 of its potential returns per unit of risk. HMM Co is currently generating about -0.04 per unit of risk. If you would invest 42,000 in Sejong Telecom on November 6, 2024 and sell it today you would lose (800.00) from holding Sejong Telecom or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejong Telecom vs. HMM Co
Performance |
| Timeline |
| Sejong Telecom |
| HMM Co |
Sejong Telecom and HMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Telecom and HMM
The main advantage of trading using opposite Sejong Telecom and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Telecom position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.| Sejong Telecom vs. Sam Chun Dang | Sejong Telecom vs. SAMRYOONG CoLtd | Sejong Telecom vs. BYON Co | Sejong Telecom vs. Sangsangin 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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