Correlation Between Seojin Automotive and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Seojin Automotive and Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Seojin Automotive and Cheryong Industrial 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 Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seojin Automotive and Cheryong Industrial.
Diversification Opportunities for Seojin Automotive and Cheryong Industrial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Seojin and Cheryong is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Seojin Automotive CoLtd and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd 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 Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Seojin Automotive i.e., Seojin Automotive and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Seojin Automotive and Cheryong Industrial
Assuming the 90 days trading horizon Seojin Automotive CoLtd is expected to under-perform the Cheryong Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Seojin Automotive CoLtd is 1.47 times less risky than Cheryong Industrial. The stock trades about -0.25 of its potential returns per unit of risk. The Cheryong Industrial CoLtd is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 558,000 in Cheryong Industrial CoLtd on September 13, 2024 and sell it today you would lose (33,000) from holding Cheryong Industrial CoLtd or give up 5.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seojin Automotive CoLtd vs. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Seojin Automotive CoLtd |
| Cheryong Industrial CoLtd |
Seojin Automotive and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seojin Automotive and Cheryong Industrial
The main advantage of trading using opposite Seojin Automotive and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seojin Automotive position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's long position.| Seojin Automotive vs. InfoBank | Seojin Automotive vs. INNOX Advanced Materials | Seojin Automotive vs. DB Financial Investment | Seojin Automotive vs. Hyosung Advanced Materials |
| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. Solution Advanced Technology | Cheryong Industrial vs. Busan Industrial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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