Correlation Between Homecast CoLtd and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Homecast CoLtd and Seoam Machinery 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 Homecast CoLtd and Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homecast CoLtd and Seoam Machinery Industry, you can compare the effects of market volatilities on Homecast CoLtd and Seoam Machinery 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 Homecast CoLtd with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homecast CoLtd and Seoam Machinery.
Diversification Opportunities for Homecast CoLtd and Seoam Machinery
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Homecast and Seoam is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Homecast CoLtd and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry and Homecast CoLtd 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 Homecast CoLtd are associated (or correlated) with Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Homecast CoLtd i.e., Homecast CoLtd and Seoam Machinery go up and down completely randomly.
Pair Corralation between Homecast CoLtd and Seoam Machinery
Assuming the 90 days trading horizon Homecast CoLtd is expected to under-perform the Seoam Machinery. In addition to that, Homecast CoLtd is 1.36 times more volatile than Seoam Machinery Industry. It trades about -0.14 of its total potential returns per unit of risk. Seoam Machinery Industry is currently generating about 0.33 per unit of volatility. If you would invest 337,152 in Seoam Machinery Industry on October 11, 2024 and sell it today you would earn a total of 42,348 from holding Seoam Machinery Industry or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homecast CoLtd vs. Seoam Machinery Industry
Performance |
| Timeline |
| Homecast CoLtd |
| Seoam Machinery Industry |
Homecast CoLtd and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homecast CoLtd and Seoam Machinery
The main advantage of trading using opposite Homecast CoLtd and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homecast CoLtd position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| Homecast CoLtd vs. LG Household Healthcare | Homecast CoLtd vs. Samyang Foods Co | Homecast CoLtd vs. Sam Yang Foods | Homecast CoLtd vs. Aprogen Healthcare Games |
| Seoam Machinery vs. Homecast CoLtd | Seoam Machinery vs. CJ Seafood Corp | Seoam Machinery vs. KT Submarine Telecom | Seoam Machinery vs. Samlip General Foods |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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