Correlation Between Seoul Semiconductor and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both Seoul Semiconductor 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 Seoul Semiconductor and ECSTELECOM 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 ECSTELECOM Co, you can compare the effects of market volatilities on Seoul Semiconductor 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 Seoul Semiconductor with a short position of ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Semiconductor and ECSTELECOM.
Diversification Opportunities for Seoul Semiconductor and ECSTELECOM
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seoul and ECSTELECOM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Semiconductor Co and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM 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 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 Seoul Semiconductor i.e., Seoul Semiconductor and ECSTELECOM go up and down completely randomly.
Pair Corralation between Seoul Semiconductor and ECSTELECOM
Assuming the 90 days trading horizon Seoul Semiconductor Co is expected to under-perform the ECSTELECOM. In addition to that, Seoul Semiconductor is 1.28 times more volatile than ECSTELECOM Co. It trades about -0.06 of its total potential returns per unit of risk. ECSTELECOM Co is currently generating about -0.02 per unit of volatility. If you would invest 343,455 in ECSTELECOM Co on August 31, 2024 and sell it today you would lose (56,455) from holding ECSTELECOM Co or give up 16.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Seoul Semiconductor Co vs. ECSTELECOM Co
Performance |
| Timeline |
| Seoul Semiconductor |
| ECSTELECOM |
Seoul Semiconductor and ECSTELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Semiconductor and ECSTELECOM
The main advantage of trading using opposite Seoul Semiconductor and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Semiconductor 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.| Seoul Semiconductor vs. Dongsin Engineering Construction | Seoul Semiconductor vs. Doosan Fuel Cell | Seoul Semiconductor vs. Daishin Balance 1 | Seoul Semiconductor vs. Total Soft Bank |
| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. Finebesteel |
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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