Correlation Between Sejong Telecom and Settlebank
Can any of the company-specific risk be diversified away by investing in both Sejong Telecom and Settlebank 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 Settlebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Telecom and Settlebank, you can compare the effects of market volatilities on Sejong Telecom and Settlebank 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 Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Telecom and Settlebank.
Diversification Opportunities for Sejong Telecom and Settlebank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sejong and Settlebank is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank 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 Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and Settlebank go up and down completely randomly.
Pair Corralation between Sejong Telecom and Settlebank
Assuming the 90 days trading horizon Sejong Telecom is expected to under-perform the Settlebank. But the stock apears to be less risky and, when comparing its historical volatility, Sejong Telecom is 2.0 times less risky than Settlebank. The stock trades about -0.12 of its potential returns per unit of risk. The Settlebank is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,555,000 in Settlebank on November 3, 2024 and sell it today you would lose (153,000) from holding Settlebank or give up 9.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejong Telecom vs. Settlebank
Performance |
| Timeline |
| Sejong Telecom |
| Settlebank |
Sejong Telecom and Settlebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Telecom and Settlebank
The main advantage of trading using opposite Sejong Telecom and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Telecom position performs unexpectedly, Settlebank 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 Settlebank will offset losses from the drop in Settlebank's long position.| Sejong Telecom vs. Sam Chun Dang | Sejong Telecom vs. SAMRYOONG CoLtd | Sejong Telecom vs. BYON Co | Sejong Telecom vs. Sangsangin Co |
| Settlebank vs. Daou Data Corp | Settlebank vs. Global Standard Technology | Settlebank vs. Digital Imaging Technology | Settlebank vs. NICE Information Service |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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