Correlation Between CU Medical and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both CU Medical and Sejong Telecom 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 CU Medical and Sejong Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Medical Systems and Sejong Telecom, you can compare the effects of market volatilities on CU Medical and Sejong Telecom 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 CU Medical with a short position of Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Medical and Sejong Telecom.
Diversification Opportunities for CU Medical and Sejong Telecom
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 115480 and Sejong is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CU Medical Systems and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom and CU 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 CU Medical Systems are associated (or correlated) with Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of CU Medical i.e., CU Medical and Sejong Telecom go up and down completely randomly.
Pair Corralation between CU Medical and Sejong Telecom
Assuming the 90 days trading horizon CU Medical Systems is expected to generate 1.89 times more return on investment than Sejong Telecom. However, CU Medical is 1.89 times more volatile than Sejong Telecom. It trades about -0.06 of its potential returns per unit of risk. Sejong Telecom is currently generating about -0.27 per unit of risk. If you would invest 69,500 in CU Medical Systems on August 29, 2024 and sell it today you would lose (5,800) from holding CU Medical Systems or give up 8.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Medical Systems vs. Sejong Telecom
Performance |
| Timeline |
| CU Medical Systems |
| Sejong Telecom |
CU Medical and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Medical and Sejong Telecom
The main advantage of trading using opposite CU Medical and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Medical position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.| CU Medical vs. Samsung Electronics Co | CU Medical vs. Samsung Electronics Co | CU Medical vs. LG Energy Solution | CU Medical vs. SK Hynix |
| Sejong Telecom vs. Sam Chun Dang | Sejong Telecom vs. SAMRYOONG CoLtd | Sejong Telecom vs. BYON Co | Sejong Telecom vs. Sangsangin 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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