Correlation Between Korea Computer and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Korea Computer and Seoul Food 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 Computer and Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer Terminal and Seoul Food Industrial, you can compare the effects of market volatilities on Korea Computer and Seoul Food 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 Computer with a short position of Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Seoul Food.
Diversification Opportunities for Korea Computer and Seoul Food
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Seoul is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer Terminal and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial and Korea Computer 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 Computer Terminal are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Korea Computer i.e., Korea Computer and Seoul Food go up and down completely randomly.
Pair Corralation between Korea Computer and Seoul Food
Assuming the 90 days trading horizon Korea Computer Terminal is expected to generate 3.09 times more return on investment than Seoul Food. However, Korea Computer is 3.09 times more volatile than Seoul Food Industrial. It trades about 0.01 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.01 per unit of risk. If you would invest 251,000 in Korea Computer Terminal on August 30, 2024 and sell it today you would lose (4,500) from holding Korea Computer Terminal or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer Terminal vs. Seoul Food Industrial
Performance |
| Timeline |
| Korea Computer Terminal |
| Seoul Food Industrial |
Korea Computer and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and Seoul Food
The main advantage of trading using opposite Korea Computer and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, Seoul Food 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 Food will offset losses from the drop in Seoul Food's long position.| Korea Computer vs. Seoul Food Industrial | Korea Computer vs. Aprogen Healthcare Games | Korea Computer vs. Hyunwoo Industrial Co | Korea Computer vs. Cheryong Industrial CoLtd |
| Seoul Food vs. Osang Healthcare Co,Ltd | Seoul Food vs. Coloray International Investment | Seoul Food vs. Lotte Non Life Insurance | Seoul Food vs. Hanwha InvestmentSecurities 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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