Correlation Between KEPCO Engineering and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both KEPCO Engineering and Seoam Machinery 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 KEPCO Engineering and Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEPCO Engineering Construction and Seoam Machinery Industry, you can compare the effects of market volatilities on KEPCO Engineering and Seoam Machinery 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 KEPCO Engineering with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEPCO Engineering and Seoam Machinery.
Diversification Opportunities for KEPCO Engineering and Seoam Machinery
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KEPCO and Seoam is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KEPCO Engineering Construction and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry and KEPCO Engineering 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 KEPCO Engineering Construction are associated (or correlated) with Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of KEPCO Engineering i.e., KEPCO Engineering and Seoam Machinery go up and down completely randomly.
Pair Corralation between KEPCO Engineering and Seoam Machinery
Assuming the 90 days trading horizon KEPCO Engineering Construction is expected to generate 0.94 times more return on investment than Seoam Machinery. However, KEPCO Engineering Construction is 1.06 times less risky than Seoam Machinery. It trades about 0.04 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.01 per unit of risk. If you would invest 5,672,256 in KEPCO Engineering Construction on September 1, 2024 and sell it today you would earn a total of 1,127,744 from holding KEPCO Engineering Construction or generate 19.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEPCO Engineering Construction vs. Seoam Machinery Industry
Performance |
| Timeline |
| KEPCO Engineering |
| Seoam Machinery Industry |
KEPCO Engineering and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEPCO Engineering and Seoam Machinery
The main advantage of trading using opposite KEPCO Engineering and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEPCO Engineering position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| KEPCO Engineering vs. Samsung CT Corp | KEPCO Engineering vs. Hyundai Engineering Construction | KEPCO Engineering vs. Kolon Globalco |
| Seoam Machinery vs. COWINTECH Co | Seoam Machinery vs. Young Poong Precision | Seoam Machinery vs. Haisung TPC Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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