Correlation Between INSUN Environmental and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both INSUN Environmental and Seoul Electronics 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 Environmental and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSUN Environmental New and Seoul Electronics Telecom, you can compare the effects of market volatilities on INSUN Environmental and Seoul Electronics 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 Environmental with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSUN Environmental and Seoul Electronics.
Diversification Opportunities for INSUN Environmental and Seoul Electronics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INSUN and Seoul is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding INSUN Environmental New and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom and INSUN Environmental 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 Environmental New are associated (or correlated) with Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of INSUN Environmental i.e., INSUN Environmental and Seoul Electronics go up and down completely randomly.
Pair Corralation between INSUN Environmental and Seoul Electronics
Assuming the 90 days trading horizon INSUN Environmental New is expected to generate 0.65 times more return on investment than Seoul Electronics. However, INSUN Environmental New is 1.55 times less risky than Seoul Electronics. It trades about -0.05 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.06 per unit of risk. If you would invest 888,000 in INSUN Environmental New on November 1, 2024 and sell it today you would lose (329,000) from holding INSUN Environmental New or give up 37.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSUN Environmental New vs. Seoul Electronics Telecom
Performance |
| Timeline |
| INSUN Environmental New |
| Seoul Electronics Telecom |
INSUN Environmental and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSUN Environmental and Seoul Electronics
The main advantage of trading using opposite INSUN Environmental and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSUN Environmental position performs unexpectedly, Seoul Electronics 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 Electronics will offset losses from the drop in Seoul Electronics' long position.| INSUN Environmental vs. Samsung Electronics Co | INSUN Environmental vs. Samsung Electronics Co | INSUN Environmental vs. KB Financial Group | INSUN Environmental vs. Shinhan Financial Group |
| Seoul Electronics vs. Coloray International Investment | Seoul Electronics vs. Daejung Chemicals Metals | Seoul Electronics vs. DB Financial Investment | Seoul Electronics vs. Sangsangin Investment Securities |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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