Correlation Between Seoam Machinery and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery and ECSTELECOM 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 ECSTELECOM 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 ECSTELECOM Co, you can compare the effects of market volatilities on Seoam Machinery and ECSTELECOM 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 ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and ECSTELECOM.
Diversification Opportunities for Seoam Machinery and ECSTELECOM
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seoam and ECSTELECOM is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM 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 ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Seoam Machinery i.e., Seoam Machinery and ECSTELECOM go up and down completely randomly.
Pair Corralation between Seoam Machinery and ECSTELECOM
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to under-perform the ECSTELECOM. In addition to that, Seoam Machinery is 1.34 times more volatile than ECSTELECOM Co. It trades about -0.03 of its total potential returns per unit of risk. ECSTELECOM Co is currently generating about -0.01 per unit of volatility. If you would invest 362,946 in ECSTELECOM Co on October 14, 2024 and sell it today you would lose (47,946) from holding ECSTELECOM Co or give up 13.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoam Machinery Industry vs. ECSTELECOM Co
Performance |
| Timeline |
| Seoam Machinery Industry |
| ECSTELECOM |
Seoam Machinery and ECSTELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and ECSTELECOM
The main advantage of trading using opposite Seoam Machinery and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery position performs unexpectedly, ECSTELECOM 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 ECSTELECOM will offset losses from the drop in ECSTELECOM's long position.| Seoam Machinery vs. Hwasung Industrial Co | Seoam Machinery vs. Nable Communications | Seoam Machinery vs. Mobile Appliance | Seoam Machinery vs. Innowireless Co |
| ECSTELECOM vs. E Investment Development | ECSTELECOM vs. EBEST Investment Securities | ECSTELECOM vs. Tuksu Engineering ConstructionLtd | ECSTELECOM vs. Seoam Machinery Industry |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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