Correlation Between SOOSAN INT and KEYEASTCoLtd
Can any of the company-specific risk be diversified away by investing in both SOOSAN INT and KEYEASTCoLtd 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 SOOSAN INT and KEYEASTCoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOOSAN INT Co and KEYEASTCoLtd, you can compare the effects of market volatilities on SOOSAN INT and KEYEASTCoLtd 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 SOOSAN INT with a short position of KEYEASTCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOOSAN INT and KEYEASTCoLtd.
Diversification Opportunities for SOOSAN INT and KEYEASTCoLtd
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOOSAN and KEYEASTCoLtd is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SOOSAN INT Co and KEYEASTCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYEASTCoLtd and SOOSAN INT 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 SOOSAN INT Co are associated (or correlated) with KEYEASTCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYEASTCoLtd has no effect on the direction of SOOSAN INT i.e., SOOSAN INT and KEYEASTCoLtd go up and down completely randomly.
Pair Corralation between SOOSAN INT and KEYEASTCoLtd
Assuming the 90 days trading horizon SOOSAN INT Co is expected to under-perform the KEYEASTCoLtd. But the stock apears to be less risky and, when comparing its historical volatility, SOOSAN INT Co is 1.03 times less risky than KEYEASTCoLtd. The stock trades about -0.3 of its potential returns per unit of risk. The KEYEASTCoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 437,000 in KEYEASTCoLtd on August 29, 2024 and sell it today you would earn a total of 15,000 from holding KEYEASTCoLtd or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOOSAN INT Co vs. KEYEASTCoLtd
Performance |
| Timeline |
| SOOSAN INT |
| KEYEASTCoLtd |
SOOSAN INT and KEYEASTCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOOSAN INT and KEYEASTCoLtd
The main advantage of trading using opposite SOOSAN INT and KEYEASTCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOOSAN INT position performs unexpectedly, KEYEASTCoLtd 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 KEYEASTCoLtd will offset losses from the drop in KEYEASTCoLtd's long position.The idea behind SOOSAN INT Co and KEYEASTCoLtd 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.| KEYEASTCoLtd vs. AfreecaTV Co | KEYEASTCoLtd vs. SS TECH | KEYEASTCoLtd vs. Busan Industrial Co | KEYEASTCoLtd vs. Busan Ind |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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