Correlation Between Seoam Machinery and HS Valve
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery and HS Valve 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 HS Valve 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 HS Valve Co, you can compare the effects of market volatilities on Seoam Machinery and HS Valve 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 HS Valve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and HS Valve.
Diversification Opportunities for Seoam Machinery and HS Valve
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoam and 039610 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and HS Valve Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HS Valve 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 HS Valve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HS Valve has no effect on the direction of Seoam Machinery i.e., Seoam Machinery and HS Valve go up and down completely randomly.
Pair Corralation between Seoam Machinery and HS Valve
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to generate 0.49 times more return on investment than HS Valve. However, Seoam Machinery Industry is 2.04 times less risky than HS Valve. It trades about 0.02 of its potential returns per unit of risk. HS Valve Co is currently generating about 0.0 per unit of risk. If you would invest 373,294 in Seoam Machinery Industry on October 26, 2024 and sell it today you would earn a total of 5,206 from holding Seoam Machinery Industry or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Seoam Machinery Industry vs. HS Valve Co
Performance |
| Timeline |
| Seoam Machinery Industry |
| HS Valve |
Seoam Machinery and HS Valve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and HS Valve
The main advantage of trading using opposite Seoam Machinery and HS Valve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery position performs unexpectedly, HS Valve 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 HS Valve will offset losses from the drop in HS Valve's long position.| Seoam Machinery vs. LEENO Industrial | Seoam Machinery vs. DRB Industrial Co | Seoam Machinery vs. Guyoung Technology Co | Seoam Machinery vs. Automobile Pc |
| HS Valve vs. Daejung Chemicals Metals | HS Valve vs. Tae Kyung Chemical | HS Valve vs. Duksan Hi Metal | HS Valve vs. Youngchang Chemical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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