Correlation Between Sejong Telecom and TAEYANG
Can any of the company-specific risk be diversified away by investing in both Sejong Telecom and TAEYANG 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 TAEYANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Telecom and TAEYANG, you can compare the effects of market volatilities on Sejong Telecom and TAEYANG 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 TAEYANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Telecom and TAEYANG.
Diversification Opportunities for Sejong Telecom and TAEYANG
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sejong and TAEYANG is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and TAEYANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAEYANG 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 TAEYANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAEYANG has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and TAEYANG go up and down completely randomly.
Pair Corralation between Sejong Telecom and TAEYANG
Assuming the 90 days trading horizon Sejong Telecom is expected to under-perform the TAEYANG. But the stock apears to be less risky and, when comparing its historical volatility, Sejong Telecom is 1.07 times less risky than TAEYANG. The stock trades about -0.27 of its potential returns per unit of risk. The TAEYANG is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 625,000 in TAEYANG on September 22, 2024 and sell it today you would earn a total of 22,000 from holding TAEYANG or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejong Telecom vs. TAEYANG
Performance |
| Timeline |
| Sejong Telecom |
| TAEYANG |
Sejong Telecom and TAEYANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Telecom and TAEYANG
The main advantage of trading using opposite Sejong Telecom and TAEYANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Telecom position performs unexpectedly, TAEYANG 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 TAEYANG will offset losses from the drop in TAEYANG's long position.| Sejong Telecom vs. Samsung Electronics Co | Sejong Telecom vs. Samsung Electronics Co | Sejong Telecom vs. KB Financial Group | Sejong Telecom vs. Shinhan Financial Group |
| TAEYANG vs. Sejong Telecom | TAEYANG vs. Hansol Chemical Co | TAEYANG vs. Nable Communications | TAEYANG vs. Namhae Chemical |
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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