Correlation Between SS TECH and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both SS TECH 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 SS TECH and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SS TECH and Seoul Electronics Telecom, you can compare the effects of market volatilities on SS TECH 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 SS TECH with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SS TECH and Seoul Electronics.
Diversification Opportunities for SS TECH and Seoul Electronics
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between 101490 and Seoul is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SS TECH 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 SS TECH 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 SS TECH 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 SS TECH i.e., SS TECH and Seoul Electronics go up and down completely randomly.
Pair Corralation between SS TECH and Seoul Electronics
Assuming the 90 days trading horizon SS TECH is expected to generate 1.13 times less return on investment than Seoul Electronics. In addition to that, SS TECH is 1.12 times more volatile than Seoul Electronics Telecom. It trades about 0.27 of its total potential returns per unit of risk. Seoul Electronics Telecom is currently generating about 0.34 per unit of volatility. If you would invest 22,100 in Seoul Electronics Telecom on October 20, 2024 and sell it today you would earn a total of 4,000 from holding Seoul Electronics Telecom or generate 18.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SS TECH vs. Seoul Electronics Telecom
Performance |
| Timeline |
| SS TECH |
| Seoul Electronics Telecom |
SS TECH and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SS TECH and Seoul Electronics
The main advantage of trading using opposite SS TECH and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SS TECH 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.The idea behind SS TECH and Seoul Electronics Telecom pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Seoul Electronics vs. Dongil Metal Co | Seoul Electronics vs. Korea Information Engineering | Seoul Electronics vs. Duksan Hi Metal | Seoul Electronics vs. System and Application |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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