Correlation Between ECSTELECOM and Seoul Semiconductor
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM and Seoul Semiconductor 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 ECSTELECOM and Seoul Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and Seoul Semiconductor Co, you can compare the effects of market volatilities on ECSTELECOM and Seoul Semiconductor 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 ECSTELECOM with a short position of Seoul Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and Seoul Semiconductor.
Diversification Opportunities for ECSTELECOM and Seoul Semiconductor
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ECSTELECOM and Seoul is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and Seoul Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Semiconductor and ECSTELECOM 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 ECSTELECOM Co are associated (or correlated) with Seoul Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Semiconductor has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and Seoul Semiconductor go up and down completely randomly.
Pair Corralation between ECSTELECOM and Seoul Semiconductor
Assuming the 90 days trading horizon ECSTELECOM Co is expected to generate 0.52 times more return on investment than Seoul Semiconductor. However, ECSTELECOM Co is 1.94 times less risky than Seoul Semiconductor. It trades about -0.22 of its potential returns per unit of risk. Seoul Semiconductor Co is currently generating about -0.51 per unit of risk. If you would invest 304,500 in ECSTELECOM Co on September 2, 2024 and sell it today you would lose (17,500) from holding ECSTELECOM Co or give up 5.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. Seoul Semiconductor Co
Performance |
| Timeline |
| ECSTELECOM |
| Seoul Semiconductor |
ECSTELECOM and Seoul Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and Seoul Semiconductor
The main advantage of trading using opposite ECSTELECOM and Seoul Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM position performs unexpectedly, Seoul Semiconductor 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 Semiconductor will offset losses from the drop in Seoul Semiconductor's long position.| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. Finebesteel |
| Seoul Semiconductor vs. Dongsin Engineering Construction | Seoul Semiconductor vs. Doosan Fuel Cell | Seoul Semiconductor vs. Daishin Balance 1 | Seoul Semiconductor vs. Total Soft Bank |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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