Correlation Between Sejong Telecom and INSUN Environmental
Can any of the company-specific risk be diversified away by investing in both Sejong Telecom and INSUN Environmental 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 INSUN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Telecom and INSUN Environmental New, you can compare the effects of market volatilities on Sejong Telecom and INSUN Environmental 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 INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Telecom and INSUN Environmental.
Diversification Opportunities for Sejong Telecom and INSUN Environmental
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sejong and INSUN is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and INSUN Environmental New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSUN Environmental New 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 INSUN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSUN Environmental New has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and INSUN Environmental go up and down completely randomly.
Pair Corralation between Sejong Telecom and INSUN Environmental
Assuming the 90 days trading horizon Sejong Telecom is expected to generate 1.85 times more return on investment than INSUN Environmental. However, Sejong Telecom is 1.85 times more volatile than INSUN Environmental New. It trades about -0.02 of its potential returns per unit of risk. INSUN Environmental New is currently generating about -0.05 per unit of risk. If you would invest 69,333 in Sejong Telecom on November 1, 2024 and sell it today you would lose (27,833) from holding Sejong Telecom or give up 40.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.58% |
| Values | Daily Returns |
Sejong Telecom vs. INSUN Environmental New
Performance |
| Timeline |
| Sejong Telecom |
| INSUN Environmental New |
Sejong Telecom and INSUN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Telecom and INSUN Environmental
The main advantage of trading using opposite Sejong Telecom and INSUN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Telecom position performs unexpectedly, INSUN Environmental 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 INSUN Environmental will offset losses from the drop in INSUN Environmental's long position.| Sejong Telecom vs. Sam Chun Dang | Sejong Telecom vs. SAMRYOONG CoLtd | Sejong Telecom vs. BYON Co | Sejong Telecom vs. Sangsangin Co |
| INSUN Environmental vs. Samsung Electronics Co | INSUN Environmental vs. Samsung Electronics Co | INSUN Environmental vs. KB Financial Group | INSUN Environmental vs. Shinhan Financial Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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