Correlation Between Sewoon Medical and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Sewoon Medical and Seoul 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 Sewoon Medical and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sewoon Medical Co and Seoul Electronics Telecom, you can compare the effects of market volatilities on Sewoon Medical and Seoul 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 Sewoon Medical with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sewoon Medical and Seoul Electronics.
Diversification Opportunities for Sewoon Medical and Seoul Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sewoon and Seoul is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom and Sewoon Medical 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 Sewoon Medical Co are associated (or correlated) with Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Sewoon Medical i.e., Sewoon Medical and Seoul Electronics go up and down completely randomly.
Pair Corralation between Sewoon Medical and Seoul Electronics
Assuming the 90 days trading horizon Sewoon Medical Co is expected to generate 1.09 times more return on investment than Seoul Electronics. However, Sewoon Medical is 1.09 times more volatile than Seoul Electronics Telecom. It trades about -0.18 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.36 per unit of risk. If you would invest 272,000 in Sewoon Medical Co on September 1, 2024 and sell it today you would lose (18,000) from holding Sewoon Medical Co or give up 6.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sewoon Medical Co vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Sewoon Medical |
| Seoul Electronics Telecom |
Sewoon Medical and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sewoon Medical and Seoul Electronics
The main advantage of trading using opposite Sewoon Medical and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sewoon Medical position performs unexpectedly, Seoul 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| Sewoon Medical vs. Infinitt Healthcare Co | Sewoon Medical vs. PLAYWITH | Sewoon Medical vs. CKH Food Health | Sewoon Medical vs. Samhwa Paint Industrial |
| Seoul Electronics vs. Korea New Network | Seoul Electronics vs. ICD Co | Seoul Electronics vs. DYPNF CoLtd | Seoul Electronics vs. Busan Industrial 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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