Correlation Between Seegene and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both Seegene and Sejong Telecom 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 Seegene and Sejong Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seegene and Sejong Telecom, you can compare the effects of market volatilities on Seegene and Sejong Telecom 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 Seegene with a short position of Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seegene and Sejong Telecom.
Diversification Opportunities for Seegene and Sejong Telecom
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seegene and Sejong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Seegene and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom and Seegene 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 Seegene are associated (or correlated) with Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of Seegene i.e., Seegene and Sejong Telecom go up and down completely randomly.
Pair Corralation between Seegene and Sejong Telecom
Assuming the 90 days trading horizon Seegene is expected to generate 3.31 times more return on investment than Sejong Telecom. However, Seegene is 3.31 times more volatile than Sejong Telecom. It trades about 0.05 of its potential returns per unit of risk. Sejong Telecom is currently generating about -0.19 per unit of risk. If you would invest 2,063,547 in Seegene on September 2, 2024 and sell it today you would earn a total of 311,453 from holding Seegene or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seegene vs. Sejong Telecom
Performance |
| Timeline |
| Seegene |
| Sejong Telecom |
Seegene and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seegene and Sejong Telecom
The main advantage of trading using opposite Seegene and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seegene position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.The idea behind Seegene and Sejong Telecom pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sejong Telecom vs. AfreecaTV Co | Sejong Telecom vs. Seegene | Sejong Telecom vs. SS TECH | Sejong Telecom vs. Busan Industrial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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