Correlation Between Korea Investment and Seoul Semiconductor
Can any of the company-specific risk be diversified away by investing in both Korea Investment 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 Korea Investment and Seoul Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Investment Holdings and Seoul Semiconductor Co, you can compare the effects of market volatilities on Korea Investment 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 Korea Investment with a short position of Seoul Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Seoul Semiconductor.
Diversification Opportunities for Korea Investment and Seoul Semiconductor
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Seoul is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Seoul Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Semiconductor and Korea Investment 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 Korea Investment Holdings 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 Korea Investment i.e., Korea Investment and Seoul Semiconductor go up and down completely randomly.
Pair Corralation between Korea Investment and Seoul Semiconductor
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 0.38 times more return on investment than Seoul Semiconductor. However, Korea Investment Holdings is 2.65 times less risky than Seoul Semiconductor. It trades about -0.02 of its potential returns per unit of risk. Seoul Semiconductor Co is currently generating about -0.44 per unit of risk. If you would invest 5,320,000 in Korea Investment Holdings on August 28, 2024 and sell it today you would lose (20,000) from holding Korea Investment Holdings or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Seoul Semiconductor Co
Performance |
| Timeline |
| Korea Investment Holdings |
| Seoul Semiconductor |
Korea Investment and Seoul Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Seoul Semiconductor
The main advantage of trading using opposite Korea Investment and Seoul Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment 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.| Korea Investment vs. Samji Electronics Co | Korea Investment vs. Sunny Electronics Corp | Korea Investment vs. Genie Music | Korea Investment vs. Alton Sports CoLtd |
| Seoul Semiconductor vs. Korea Real Estate | Seoul Semiconductor vs. Korea Ratings Co | Seoul Semiconductor vs. IQuest Co | Seoul Semiconductor vs. Wonbang Tech Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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