Correlation Between Miwon Chemical and Seah Steel
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and Seah Steel 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 Miwon Chemical and Seah Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Seah Steel Corp, you can compare the effects of market volatilities on Miwon Chemical and Seah Steel 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 Miwon Chemical with a short position of Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Seah Steel.
Diversification Opportunities for Miwon Chemical and Seah Steel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Miwon and Seah is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and Seah Steel go up and down completely randomly.
Pair Corralation between Miwon Chemical and Seah Steel
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 0.28 times more return on investment than Seah Steel. However, Miwon Chemical is 3.58 times less risky than Seah Steel. It trades about -0.03 of its potential returns per unit of risk. Seah Steel Corp is currently generating about -0.04 per unit of risk. If you would invest 7,970,000 in Miwon Chemical on September 12, 2024 and sell it today you would lose (70,000) from holding Miwon Chemical or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Seah Steel Corp
Performance |
| Timeline |
| Miwon Chemical |
| Seah Steel Corp |
Miwon Chemical and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Seah Steel
The main advantage of trading using opposite Miwon Chemical and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel's long position.| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. DukSan Neolux CoLtd | Miwon Chemical vs. Hyosung Chemical Corp |
| Seah Steel vs. LG Chemicals | Seah Steel vs. POSCO Holdings | Seah Steel vs. Hanwha Solutions | Seah Steel vs. Lotte Chemical Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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