Correlation Between Seoam Machinery and Sungwoo Electronics
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery and Sungwoo Electronics 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 Sungwoo Electronics 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 Sungwoo Electronics Co, you can compare the effects of market volatilities on Seoam Machinery and Sungwoo Electronics 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 Sungwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and Sungwoo Electronics.
Diversification Opportunities for Seoam Machinery and Sungwoo Electronics
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Seoam and Sungwoo is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics 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 Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of Seoam Machinery i.e., Seoam Machinery and Sungwoo Electronics go up and down completely randomly.
Pair Corralation between Seoam Machinery and Sungwoo Electronics
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to generate 0.98 times more return on investment than Sungwoo Electronics. However, Seoam Machinery Industry is 1.02 times less risky than Sungwoo Electronics. It trades about -0.03 of its potential returns per unit of risk. Sungwoo Electronics Co is currently generating about -0.34 per unit of risk. If you would invest 380,500 in Seoam Machinery Industry on September 5, 2024 and sell it today you would lose (9,500) from holding Seoam Machinery Industry or give up 2.5% 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. Sungwoo Electronics Co
Performance |
| Timeline |
| Seoam Machinery Industry |
| Sungwoo Electronics |
Seoam Machinery and Sungwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and Sungwoo Electronics
The main advantage of trading using opposite Seoam Machinery and Sungwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery position performs unexpectedly, Sungwoo Electronics 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 Sungwoo Electronics will offset losses from the drop in Sungwoo Electronics' long position.| Seoam Machinery vs. CS BEARING CoLtd | Seoam Machinery vs. DAEMO Engineering Co | Seoam Machinery vs. Haisung TPC Co | Seoam Machinery vs. Booster Co |
| Sungwoo Electronics vs. Seoam Machinery Industry | Sungwoo Electronics vs. Hanjoo Light Metal | Sungwoo Electronics vs. Daiyang Metal Co | Sungwoo Electronics vs. Youngsin Metal Industrial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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