Correlation Between Seoul Semiconductor and ABOV Semiconductor
Can any of the company-specific risk be diversified away by investing in both Seoul Semiconductor and ABOV Semiconductor 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 ABOV Semiconductor 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 ABOV Semiconductor Co, you can compare the effects of market volatilities on Seoul Semiconductor and ABOV Semiconductor 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 ABOV Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Semiconductor and ABOV Semiconductor.
Diversification Opportunities for Seoul Semiconductor and ABOV Semiconductor
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and ABOV is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Semiconductor Co and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor 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 ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of Seoul Semiconductor i.e., Seoul Semiconductor and ABOV Semiconductor go up and down completely randomly.
Pair Corralation between Seoul Semiconductor and ABOV Semiconductor
Assuming the 90 days trading horizon Seoul Semiconductor Co is expected to under-perform the ABOV Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Semiconductor Co is 1.2 times less risky than ABOV Semiconductor. The stock trades about -0.56 of its potential returns per unit of risk. The ABOV Semiconductor Co is currently generating about -0.36 of returns per unit of risk over similar time horizon. If you would invest 981,000 in ABOV Semiconductor Co on September 1, 2024 and sell it today you would lose (202,000) from holding ABOV Semiconductor Co or give up 20.59% 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. ABOV Semiconductor Co
Performance |
| Timeline |
| Seoul Semiconductor |
| ABOV Semiconductor |
Seoul Semiconductor and ABOV Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Semiconductor and ABOV Semiconductor
The main advantage of trading using opposite Seoul Semiconductor and ABOV Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Semiconductor position performs unexpectedly, ABOV Semiconductor 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 ABOV Semiconductor will offset losses from the drop in ABOV Semiconductor's long position.The idea behind Seoul Semiconductor Co and ABOV Semiconductor 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.| ABOV Semiconductor vs. Dongsin Engineering Construction | ABOV Semiconductor vs. Doosan Fuel Cell | ABOV Semiconductor vs. Daishin Balance 1 | ABOV Semiconductor vs. Total Soft Bank |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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