Correlation Between Korea New and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both Korea New and Sejong Telecom 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 Sejong Telecom 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 Sejong Telecom, you can compare the effects of market volatilities on Korea New and Sejong Telecom 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 Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Sejong Telecom.
Diversification Opportunities for Korea New and Sejong Telecom
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Sejong is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom 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 Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of Korea New i.e., Korea New and Sejong Telecom go up and down completely randomly.
Pair Corralation between Korea New and Sejong Telecom
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the Sejong Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Korea New Network is 2.04 times less risky than Sejong Telecom. The stock trades about -0.09 of its potential returns per unit of risk. The Sejong Telecom is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 66,540 in Sejong Telecom on September 4, 2024 and sell it today you would lose (23,440) from holding Sejong Telecom or give up 35.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.98% |
| Values | Daily Returns |
Korea New Network vs. Sejong Telecom
Performance |
| Timeline |
| Korea New Network |
| Sejong Telecom |
Korea New and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Sejong Telecom
The main advantage of trading using opposite Korea New and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.| Korea New vs. Kukdo Chemical Co | Korea New vs. Ssangyong Materials Corp | Korea New vs. SH Energy Chemical | Korea New vs. EV Advanced Material |
| Sejong Telecom vs. Korea New Network | Sejong Telecom vs. ICD Co | Sejong Telecom vs. DYPNF CoLtd | Sejong Telecom vs. Busan Industrial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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