Correlation Between WISE ITech and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both WISE ITech 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 WISE ITech and Sejong Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WISE iTech Co and Sejong Telecom, you can compare the effects of market volatilities on WISE ITech 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 WISE ITech with a short position of Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of WISE ITech and Sejong Telecom.
Diversification Opportunities for WISE ITech and Sejong Telecom
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WISE and Sejong is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding WISE iTech Co and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom and WISE ITech 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 WISE iTech Co 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 WISE ITech i.e., WISE ITech and Sejong Telecom go up and down completely randomly.
Pair Corralation between WISE ITech and Sejong Telecom
Assuming the 90 days trading horizon WISE iTech Co is expected to generate 1.91 times more return on investment than Sejong Telecom. However, WISE ITech is 1.91 times more volatile than Sejong Telecom. It trades about -0.11 of its potential returns per unit of risk. Sejong Telecom is currently generating about -0.44 per unit of risk. If you would invest 441,000 in WISE iTech Co on August 29, 2024 and sell it today you would lose (24,500) from holding WISE iTech Co or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WISE iTech Co vs. Sejong Telecom
Performance |
| Timeline |
| WISE iTech |
| Sejong Telecom |
WISE ITech and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WISE ITech and Sejong Telecom
The main advantage of trading using opposite WISE ITech and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WISE ITech 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.The idea behind WISE iTech Co and Sejong Telecom pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sejong Telecom vs. AfreecaTV Co | Sejong Telecom vs. SS TECH | Sejong Telecom vs. Busan Industrial Co | Sejong Telecom vs. Busan Ind |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Transaction History View history of all your transactions and understand their impact on performance |