Correlation Between Dongwoo Farm and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Seohee Construction 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 Dongwoo Farm and Seohee Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Seohee Construction Co, you can compare the effects of market volatilities on Dongwoo Farm and Seohee Construction 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 Dongwoo Farm with a short position of Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Seohee Construction.
Diversification Opportunities for Dongwoo Farm and Seohee Construction
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongwoo and Seohee is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction and Dongwoo Farm 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 Dongwoo Farm To are associated (or correlated) with Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Seohee Construction go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Seohee Construction
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Seohee Construction. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 1.07 times less risky than Seohee Construction. The stock trades about -0.04 of its potential returns per unit of risk. The Seohee Construction Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 115,666 in Seohee Construction Co on August 29, 2024 and sell it today you would earn a total of 25,834 from holding Seohee Construction Co or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Seohee Construction Co
Performance |
| Timeline |
| Dongwoo Farm To |
| Seohee Construction |
Dongwoo Farm and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Seohee Construction
The main advantage of trading using opposite Dongwoo Farm and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Seohee Construction 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 Seohee Construction will offset losses from the drop in Seohee Construction's long position.| Dongwoo Farm vs. J Steel Co | Dongwoo Farm vs. Hanil Iron Steel | Dongwoo Farm vs. DAEDUCK ELECTRONICS CoLtd | Dongwoo Farm vs. Han Kook Steel |
| Seohee Construction vs. Samsung Electronics Co | Seohee Construction vs. Samsung Electronics Co | Seohee Construction vs. Hyundai Motor Co | Seohee Construction vs. Hyundai Motor |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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