Correlation Between Union Materials and Semyung Electric
Can any of the company-specific risk be diversified away by investing in both Union Materials and Semyung Electric 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 Union Materials and Semyung Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and Semyung Electric Machinery, you can compare the effects of market volatilities on Union Materials and Semyung Electric 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 Union Materials with a short position of Semyung Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and Semyung Electric.
Diversification Opportunities for Union Materials and Semyung Electric
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Union and Semyung is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and Semyung Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semyung Electric Mac and Union Materials 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 Union Materials Corp are associated (or correlated) with Semyung Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semyung Electric Mac has no effect on the direction of Union Materials i.e., Union Materials and Semyung Electric go up and down completely randomly.
Pair Corralation between Union Materials and Semyung Electric
Assuming the 90 days trading horizon Union Materials is expected to generate 3.52 times less return on investment than Semyung Electric. But when comparing it to its historical volatility, Union Materials Corp is 1.06 times less risky than Semyung Electric. It trades about 0.02 of its potential returns per unit of risk. Semyung Electric Machinery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 298,739 in Semyung Electric Machinery on November 7, 2024 and sell it today you would earn a total of 289,261 from holding Semyung Electric Machinery or generate 96.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. Semyung Electric Machinery
Performance |
| Timeline |
| Union Materials Corp |
| Semyung Electric Mac |
Union Materials and Semyung Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and Semyung Electric
The main advantage of trading using opposite Union Materials and Semyung Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials position performs unexpectedly, Semyung Electric 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 Semyung Electric will offset losses from the drop in Semyung Electric's long position.| Union Materials vs. Sangsangin Investment Securities | Union Materials vs. Samyang Foods Co | Union Materials vs. Atinum Investment Co | Union Materials vs. DB Insurance Co |
| Semyung Electric vs. Dawonsys CoLtd | Semyung Electric vs. Elentec Co | Semyung Electric vs. Robostar CoLtd | Semyung Electric vs. HyVision System |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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