Correlation Between Seoam Machinery and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery 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 Seoam Machinery and Seohee Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoam Machinery Industry and Seohee Construction Co, you can compare the effects of market volatilities on Seoam Machinery 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 Seoam Machinery with a short position of Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and Seohee Construction.
Diversification Opportunities for Seoam Machinery and Seohee Construction
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Seoam and Seohee is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction and Seoam Machinery 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 Seoam Machinery Industry 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 Seoam Machinery i.e., Seoam Machinery and Seohee Construction go up and down completely randomly.
Pair Corralation between Seoam Machinery and Seohee Construction
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to generate 2.2 times more return on investment than Seohee Construction. However, Seoam Machinery is 2.2 times more volatile than Seohee Construction Co. It trades about 0.13 of its potential returns per unit of risk. Seohee Construction Co is currently generating about 0.0 per unit of risk. If you would invest 377,000 in Seoam Machinery Industry on August 29, 2024 and sell it today you would earn a total of 25,000 from holding Seoam Machinery Industry or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoam Machinery Industry vs. Seohee Construction Co
Performance |
| Timeline |
| Seoam Machinery Industry |
| Seohee Construction |
Seoam Machinery and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and Seohee Construction
The main advantage of trading using opposite Seoam Machinery and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery 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.The idea behind Seoam Machinery Industry and Seohee Construction Co 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.| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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