Correlation Between Sejong Telecom and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both Sejong Telecom and ECSTELECOM 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 ECSTELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Telecom and ECSTELECOM Co, you can compare the effects of market volatilities on Sejong Telecom and ECSTELECOM 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 ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Telecom and ECSTELECOM.
Diversification Opportunities for Sejong Telecom and ECSTELECOM
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sejong and ECSTELECOM is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM 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 ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and ECSTELECOM go up and down completely randomly.
Pair Corralation between Sejong Telecom and ECSTELECOM
Assuming the 90 days trading horizon Sejong Telecom is expected to under-perform the ECSTELECOM. But the stock apears to be less risky and, when comparing its historical volatility, Sejong Telecom is 1.39 times less risky than ECSTELECOM. The stock trades about -0.28 of its potential returns per unit of risk. The ECSTELECOM Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 300,500 in ECSTELECOM Co on August 28, 2024 and sell it today you would lose (7,500) from holding ECSTELECOM Co or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejong Telecom vs. ECSTELECOM Co
Performance |
| Timeline |
| Sejong Telecom |
| ECSTELECOM |
Sejong Telecom and ECSTELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Telecom and ECSTELECOM
The main advantage of trading using opposite Sejong Telecom and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Telecom position performs unexpectedly, ECSTELECOM 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 ECSTELECOM will offset losses from the drop in ECSTELECOM's long position.| Sejong Telecom vs. AfreecaTV Co | Sejong Telecom vs. SS TECH | Sejong Telecom vs. Busan Industrial Co | Sejong Telecom vs. Busan Ind |
| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. UNISEM 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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