Correlation Between Seojin Automotive and HANA Micron
Can any of the company-specific risk be diversified away by investing in both Seojin Automotive and HANA Micron 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 Seojin Automotive and HANA Micron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seojin Automotive CoLtd and HANA Micron, you can compare the effects of market volatilities on Seojin Automotive and HANA Micron 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 Seojin Automotive with a short position of HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seojin Automotive and HANA Micron.
Diversification Opportunities for Seojin Automotive and HANA Micron
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Seojin and HANA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Seojin Automotive CoLtd and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron and Seojin Automotive 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 Seojin Automotive CoLtd are associated (or correlated) with HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Seojin Automotive i.e., Seojin Automotive and HANA Micron go up and down completely randomly.
Pair Corralation between Seojin Automotive and HANA Micron
Assuming the 90 days trading horizon Seojin Automotive CoLtd is expected to under-perform the HANA Micron. But the stock apears to be less risky and, when comparing its historical volatility, Seojin Automotive CoLtd is 2.41 times less risky than HANA Micron. The stock trades about -0.04 of its potential returns per unit of risk. The HANA Micron is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 990,000 in HANA Micron on November 27, 2024 and sell it today you would earn a total of 179,000 from holding HANA Micron or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.28% |
| Values | Daily Returns |
Seojin Automotive CoLtd vs. HANA Micron
Performance |
| Timeline |
| Seojin Automotive CoLtd |
| HANA Micron |
Seojin Automotive and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seojin Automotive and HANA Micron
The main advantage of trading using opposite Seojin Automotive and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seojin Automotive position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.The idea behind Seojin Automotive CoLtd and HANA Micron 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.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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