Correlation Between Seoul Semiconductor and Kukil Metal
Can any of the company-specific risk be diversified away by investing in both Seoul Semiconductor and Kukil Metal 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 Seoul Semiconductor and Kukil Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Semiconductor Co and Kukil Metal Co, you can compare the effects of market volatilities on Seoul Semiconductor and Kukil Metal 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 Seoul Semiconductor with a short position of Kukil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Semiconductor and Kukil Metal.
Diversification Opportunities for Seoul Semiconductor and Kukil Metal
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Kukil is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Semiconductor Co and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal and Seoul Semiconductor 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 Seoul Semiconductor Co are associated (or correlated) with Kukil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukil Metal has no effect on the direction of Seoul Semiconductor i.e., Seoul Semiconductor and Kukil Metal go up and down completely randomly.
Pair Corralation between Seoul Semiconductor and Kukil Metal
Assuming the 90 days trading horizon Seoul Semiconductor Co is expected to under-perform the Kukil Metal. In addition to that, Seoul Semiconductor is 1.47 times more volatile than Kukil Metal Co. It trades about -0.56 of its total potential returns per unit of risk. Kukil Metal Co is currently generating about -0.31 per unit of volatility. If you would invest 196,300 in Kukil Metal Co on September 1, 2024 and sell it today you would lose (20,600) from holding Kukil Metal Co or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Semiconductor Co vs. Kukil Metal Co
Performance |
| Timeline |
| Seoul Semiconductor |
| Kukil Metal |
Seoul Semiconductor and Kukil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Semiconductor and Kukil Metal
The main advantage of trading using opposite Seoul Semiconductor and Kukil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Semiconductor position performs unexpectedly, Kukil Metal 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 Kukil Metal will offset losses from the drop in Kukil Metal's long position.The idea behind Seoul Semiconductor Co and Kukil Metal Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kukil Metal vs. Keum Kang Steel | Kukil Metal vs. Tplex Co | Kukil Metal vs. Gyeongnam Steel Co | Kukil Metal vs. Jeil Steel Mfg |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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