Correlation Between SEOJEON ELECTRIC and Kyeryong Construction
Can any of the company-specific risk be diversified away by investing in both SEOJEON ELECTRIC and Kyeryong 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 SEOJEON ELECTRIC and Kyeryong Construction 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 Kyeryong Construction Industrial, you can compare the effects of market volatilities on SEOJEON ELECTRIC and Kyeryong 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 SEOJEON ELECTRIC with a short position of Kyeryong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOJEON ELECTRIC and Kyeryong Construction.
Diversification Opportunities for SEOJEON ELECTRIC and Kyeryong Construction
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SEOJEON and Kyeryong is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SEOJEON ELECTRIC MACHINERY and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong Construction 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 Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of SEOJEON ELECTRIC i.e., SEOJEON ELECTRIC and Kyeryong Construction go up and down completely randomly.
Pair Corralation between SEOJEON ELECTRIC and Kyeryong Construction
Assuming the 90 days trading horizon SEOJEON ELECTRIC MACHINERY is expected to generate 3.31 times more return on investment than Kyeryong Construction. However, SEOJEON ELECTRIC is 3.31 times more volatile than Kyeryong Construction Industrial. It trades about 0.01 of its potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about 0.01 per unit of risk. If you would invest 463,500 in SEOJEON ELECTRIC MACHINERY on October 14, 2024 and sell it today you would lose (52,500) from holding SEOJEON ELECTRIC MACHINERY or give up 11.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEOJEON ELECTRIC MACHINERY vs. Kyeryong Construction Industri
Performance |
| Timeline |
| SEOJEON ELECTRIC MAC |
| Kyeryong Construction |
SEOJEON ELECTRIC and Kyeryong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEOJEON ELECTRIC and Kyeryong Construction
The main advantage of trading using opposite SEOJEON ELECTRIC and Kyeryong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEOJEON ELECTRIC position performs unexpectedly, Kyeryong 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 Kyeryong Construction will offset losses from the drop in Kyeryong Construction's long position.| SEOJEON ELECTRIC vs. Youngsin Metal Industrial | SEOJEON ELECTRIC vs. Shinil Electronics Co | SEOJEON ELECTRIC vs. Daewoo Electronic Components | SEOJEON ELECTRIC vs. Kbi Metal Co |
| Kyeryong Construction vs. Tway Air Co | Kyeryong Construction vs. Nable Communications | Kyeryong Construction vs. Daishin Information Communications | Kyeryong Construction vs. Air Busan 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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