Correlation Between Global Standard and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Global Standard 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 Global Standard and Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and Seoam Machinery Industry, you can compare the effects of market volatilities on Global Standard 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 Global Standard with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and Seoam Machinery.
Diversification Opportunities for Global Standard and Seoam Machinery
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Seoam is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology 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 Global Standard 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 Global Standard Technology 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 Global Standard i.e., Global Standard and Seoam Machinery go up and down completely randomly.
Pair Corralation between Global Standard and Seoam Machinery
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 1.62 times more return on investment than Seoam Machinery. However, Global Standard is 1.62 times more volatile than Seoam Machinery Industry. It trades about 0.04 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.01 per unit of risk. If you would invest 1,447,768 in Global Standard Technology on October 18, 2024 and sell it today you would earn a total of 334,232 from holding Global Standard Technology or generate 23.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. Seoam Machinery Industry
Performance |
| Timeline |
| Global Standard Tech |
| Seoam Machinery Industry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Global Standard and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and Seoam Machinery
The main advantage of trading using opposite Global Standard and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard 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.| Global Standard vs. Industrial Bank | Global Standard vs. Samyang Foods Co | Global Standard vs. Dongil Metal Co | Global Standard vs. Seoul Food Industrial |
| Seoam Machinery vs. LG Display Co | Seoam Machinery vs. Korea Alcohol Industrial | Seoam Machinery vs. Grand Korea Leisure | Seoam Machinery vs. Inzi Display CoLtd |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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