Correlation Between Korea New and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both Korea New 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 Korea New and Seohee Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Seohee Construction Co, you can compare the effects of market volatilities on Korea New 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 Korea New with a short position of Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Seohee Construction.
Diversification Opportunities for Korea New and Seohee Construction
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Seohee is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction and Korea New 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 Korea New Network 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 Korea New i.e., Korea New and Seohee Construction go up and down completely randomly.
Pair Corralation between Korea New and Seohee Construction
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the Seohee Construction. But the stock apears to be less risky and, when comparing its historical volatility, Korea New Network is 1.05 times less risky than Seohee Construction. The stock trades about -0.04 of its potential returns per unit of risk. The Seohee Construction Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 137,700 in Seohee Construction Co on September 3, 2024 and sell it today you would earn a total of 13,800 from holding Seohee Construction Co or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Seohee Construction Co
Performance |
| Timeline |
| Korea New Network |
| Seohee Construction |
Korea New and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Seohee Construction
The main advantage of trading using opposite Korea New and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New 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.| Korea New vs. Daejoo Electronic Materials | Korea New vs. Lake Materials Co | Korea New vs. Lotte Energy Materials | Korea New vs. EV Advanced Material |
| Seohee Construction vs. LG Display | Seohee Construction vs. Hyundai Motor | Seohee Construction vs. Hyundai Motor Co | Seohee Construction vs. Hyundai Motor 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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