Correlation Between Seoam Machinery and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery and SK Chemicals 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 SK Chemicals 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 SK Chemicals Co, you can compare the effects of market volatilities on Seoam Machinery and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and SK Chemicals.
Diversification Opportunities for Seoam Machinery and SK Chemicals
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seoam and 28513K is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Seoam Machinery i.e., Seoam Machinery and SK Chemicals go up and down completely randomly.
Pair Corralation between Seoam Machinery and SK Chemicals
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to generate 1.62 times more return on investment than SK Chemicals. However, Seoam Machinery is 1.62 times more volatile than SK Chemicals Co. It trades about -0.03 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.09 per unit of risk. If you would invest 614,100 in Seoam Machinery Industry on October 18, 2024 and sell it today you would lose (234,600) from holding Seoam Machinery Industry or give up 38.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoam Machinery Industry vs. SK Chemicals Co
Performance |
| Timeline |
| Seoam Machinery Industry |
| SK Chemicals |
Seoam Machinery and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and SK Chemicals
The main advantage of trading using opposite Seoam Machinery and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Seoam Machinery vs. TK Chemical | Seoam Machinery vs. Global Standard Technology | Seoam Machinery vs. Kukdo Chemical Co | Seoam Machinery vs. Kukdong Oil Chemicals |
| SK Chemicals vs. KTB Investment Securities | SK Chemicals vs. Coloray International Investment | SK Chemicals vs. Camus Engineering Construction | SK Chemicals 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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