Correlation Between Daejung Chemicals and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Seohee Construction 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 Daejung Chemicals and Seohee Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Seohee Construction Co, you can compare the effects of market volatilities on Daejung Chemicals and Seohee Construction 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 Daejung Chemicals with a short position of Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Seohee Construction.
Diversification Opportunities for Daejung Chemicals and Seohee Construction
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daejung and Seohee is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction and Daejung Chemicals 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 Daejung Chemicals Metals are associated (or correlated) with Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Seohee Construction go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Seohee Construction
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Seohee Construction. In addition to that, Daejung Chemicals is 1.27 times more volatile than Seohee Construction Co. It trades about -0.01 of its total potential returns per unit of risk. Seohee Construction Co is currently generating about 0.03 per unit of volatility. If you would invest 115,666 in Seohee Construction Co on August 29, 2024 and sell it today you would earn a total of 25,834 from holding Seohee Construction Co or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Seohee Construction Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Seohee Construction |
Daejung Chemicals and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Seohee Construction
The main advantage of trading using opposite Daejung Chemicals and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Seohee Construction 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 Seohee Construction will offset losses from the drop in Seohee Construction's long position.| Daejung Chemicals vs. Dong A Steel Technology | Daejung Chemicals vs. Ni Steel | Daejung Chemicals vs. Jeju Semiconductor Corp | Daejung Chemicals vs. Hankook Steel Co |
| Seohee Construction vs. Samsung Electronics Co | Seohee Construction vs. Samsung Electronics Co | Seohee Construction vs. Hyundai Motor Co | Seohee Construction vs. Hyundai Motor |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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