Correlation Between Sewoon Medical and Korea New
Can any of the company-specific risk be diversified away by investing in both Sewoon Medical and Korea New 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 Korea New 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 Korea New Network, you can compare the effects of market volatilities on Sewoon Medical and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sewoon Medical and Korea New.
Diversification Opportunities for Sewoon Medical and Korea New
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sewoon and Korea is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Sewoon Medical i.e., Sewoon Medical and Korea New go up and down completely randomly.
Pair Corralation between Sewoon Medical and Korea New
Assuming the 90 days trading horizon Sewoon Medical Co is expected to under-perform the Korea New. But the stock apears to be less risky and, when comparing its historical volatility, Sewoon Medical Co is 1.29 times less risky than Korea New. The stock trades about -0.16 of its potential returns per unit of risk. The Korea New Network is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 76,400 in Korea New Network on August 24, 2024 and sell it today you would earn a total of 2,800 from holding Korea New Network or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sewoon Medical Co vs. Korea New Network
Performance |
| Timeline |
| Sewoon Medical |
| Korea New Network |
Sewoon Medical and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sewoon Medical and Korea New
The main advantage of trading using opposite Sewoon Medical and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sewoon Medical position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New's long position.| Sewoon Medical vs. Medy Tox | Sewoon Medical vs. Genexine | Sewoon Medical vs. Busan Industrial Co | Sewoon Medical vs. Busan Ind |
| Korea New vs. Samyung Trading Co | Korea New vs. Korea Investment Holdings | Korea New vs. Golden Bridge Investment | Korea New vs. DSC Investment |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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