Correlation Between SFA Engineering and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both SFA Engineering and Seohee Construction 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 SFA Engineering and Seohee Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Engineering and Seohee Construction Co, you can compare the effects of market volatilities on SFA Engineering and Seohee Construction 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 SFA Engineering with a short position of Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Engineering and Seohee Construction.
Diversification Opportunities for SFA Engineering and Seohee Construction
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SFA and Seohee is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction and SFA 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 SFA Engineering are associated (or correlated) with Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of SFA Engineering i.e., SFA Engineering and Seohee Construction go up and down completely randomly.
Pair Corralation between SFA Engineering and Seohee Construction
Assuming the 90 days trading horizon SFA Engineering is expected to under-perform the Seohee Construction. In addition to that, SFA Engineering is 1.57 times more volatile than Seohee Construction Co. It trades about -0.05 of its total potential returns per unit of risk. Seohee Construction Co is currently generating about 0.02 per unit of volatility. If you would invest 133,963 in Seohee Construction Co on August 24, 2024 and sell it today you would earn a total of 6,937 from holding Seohee Construction Co or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFA Engineering vs. Seohee Construction Co
Performance |
| Timeline |
| SFA Engineering |
| Seohee Construction |
SFA Engineering and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Engineering and Seohee Construction
The main advantage of trading using opposite SFA Engineering and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Engineering position performs unexpectedly, Seohee Construction 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 Seohee Construction will offset losses from the drop in Seohee Construction's long position.The idea behind SFA Engineering and Seohee Construction 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.| Seohee Construction vs. KCC Engineering Construction | Seohee Construction vs. Samchuly Bicycle Co | Seohee Construction vs. SFA Engineering | Seohee Construction vs. SEOHAN Const EngcoLtd |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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