Correlation Between SEOJEON ELECTRIC and Golden Bridge
Can any of the company-specific risk be diversified away by investing in both SEOJEON ELECTRIC and Golden Bridge 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 SEOJEON ELECTRIC and Golden Bridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEOJEON ELECTRIC MACHINERY and Golden Bridge Investment, you can compare the effects of market volatilities on SEOJEON ELECTRIC and Golden Bridge 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 SEOJEON ELECTRIC with a short position of Golden Bridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOJEON ELECTRIC and Golden Bridge.
Diversification Opportunities for SEOJEON ELECTRIC and Golden Bridge
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEOJEON and Golden is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SEOJEON ELECTRIC MACHINERY and Golden Bridge Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Bridge Investment and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY are associated (or correlated) with Golden Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Bridge Investment has no effect on the direction of SEOJEON ELECTRIC i.e., SEOJEON ELECTRIC and Golden Bridge go up and down completely randomly.
Pair Corralation between SEOJEON ELECTRIC and Golden Bridge
Assuming the 90 days trading horizon SEOJEON ELECTRIC MACHINERY is expected to generate 5.77 times more return on investment than Golden Bridge. However, SEOJEON ELECTRIC is 5.77 times more volatile than Golden Bridge Investment. It trades about 0.33 of its potential returns per unit of risk. Golden Bridge Investment is currently generating about 0.03 per unit of risk. If you would invest 385,000 in SEOJEON ELECTRIC MACHINERY on October 28, 2024 and sell it today you would earn a total of 117,000 from holding SEOJEON ELECTRIC MACHINERY or generate 30.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEOJEON ELECTRIC MACHINERY vs. Golden Bridge Investment
Performance |
| Timeline |
| SEOJEON ELECTRIC MAC |
| Golden Bridge Investment |
SEOJEON ELECTRIC and Golden Bridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEOJEON ELECTRIC and Golden Bridge
The main advantage of trading using opposite SEOJEON ELECTRIC and Golden Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEOJEON ELECTRIC position performs unexpectedly, Golden Bridge 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 Golden Bridge will offset losses from the drop in Golden Bridge's long position.| SEOJEON ELECTRIC vs. Samsung Electronics Co | SEOJEON ELECTRIC vs. Samsung Electronics Co | SEOJEON ELECTRIC vs. KB Financial Group | SEOJEON ELECTRIC vs. Shinhan Financial Group |
| Golden Bridge vs. KB Financial Group | Golden Bridge vs. Shinhan Financial Group | Golden Bridge vs. Hana Financial | Golden Bridge vs. Woori Financial Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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