Correlation Between Insun Environment and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Insun Environment and Seoul Food 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 Insun Environment and Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insun Environment New and Seoul Food Industrial, you can compare the effects of market volatilities on Insun Environment and Seoul Food 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 Insun Environment with a short position of Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insun Environment and Seoul Food.
Diversification Opportunities for Insun Environment and Seoul Food
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Insun and Seoul is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Insun Environment New and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial and Insun Environment 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 Insun Environment New are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Insun Environment i.e., Insun Environment and Seoul Food go up and down completely randomly.
Pair Corralation between Insun Environment and Seoul Food
Assuming the 90 days trading horizon Insun Environment New is expected to generate 2.17 times more return on investment than Seoul Food. However, Insun Environment is 2.17 times more volatile than Seoul Food Industrial. It trades about 0.12 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.02 per unit of risk. If you would invest 497,500 in Insun Environment New on November 1, 2024 and sell it today you would earn a total of 61,500 from holding Insun Environment New or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insun Environment New vs. Seoul Food Industrial
Performance |
| Timeline |
| Insun Environment New |
| Seoul Food Industrial |
Insun Environment and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insun Environment and Seoul Food
The main advantage of trading using opposite Insun Environment and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insun Environment position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Insun Environment vs. Foodnamoo | Insun Environment vs. LS Materials | Insun Environment vs. Genie Music | Insun Environment vs. CKH Food Health |
| Seoul Food vs. Hanjin Transportation Co | Seoul Food vs. Daechang Steel Co | Seoul Food vs. Insun Environment New | Seoul Food vs. Alton Sports CoLtd |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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