Correlation Between Union Materials and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Union Materials and Seoul Electronics 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 Seoul Electronics 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 Seoul Electronics Telecom, you can compare the effects of market volatilities on Union Materials and Seoul Electronics 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 Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and Seoul Electronics.
Diversification Opportunities for Union Materials and Seoul Electronics
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and Seoul is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom 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 Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Union Materials i.e., Union Materials and Seoul Electronics go up and down completely randomly.
Pair Corralation between Union Materials and Seoul Electronics
Assuming the 90 days trading horizon Union Materials Corp is expected to under-perform the Seoul Electronics. In addition to that, Union Materials is 1.02 times more volatile than Seoul Electronics Telecom. It trades about -0.03 of its total potential returns per unit of risk. Seoul Electronics Telecom is currently generating about 0.0 per unit of volatility. If you would invest 23,700 in Seoul Electronics Telecom on October 30, 2024 and sell it today you would lose (400.00) from holding Seoul Electronics Telecom or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Union Materials Corp |
| Seoul Electronics Telecom |
Union Materials and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and Seoul Electronics
The main advantage of trading using opposite Union Materials and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| Union Materials vs. Aprogen Healthcare Games | Union Materials vs. LG Household Healthcare | Union Materials vs. Ssangyong Information Communication | Union Materials vs. Digital Power Communications |
| Seoul Electronics vs. Jinro Distillers Co | Seoul Electronics vs. Korea Alcohol Industrial | Seoul Electronics vs. Ssangyong Information Communication | Seoul Electronics vs. Green Cross Medical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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