Correlation Between SEOJEON ELECTRIC and Taegu Broadcasting
Can any of the company-specific risk be diversified away by investing in both SEOJEON ELECTRIC and Taegu Broadcasting 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 Taegu Broadcasting 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 Taegu Broadcasting, you can compare the effects of market volatilities on SEOJEON ELECTRIC and Taegu Broadcasting 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 Taegu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOJEON ELECTRIC and Taegu Broadcasting.
Diversification Opportunities for SEOJEON ELECTRIC and Taegu Broadcasting
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SEOJEON and Taegu is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SEOJEON ELECTRIC MACHINERY and Taegu Broadcasting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taegu Broadcasting 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 Taegu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taegu Broadcasting has no effect on the direction of SEOJEON ELECTRIC i.e., SEOJEON ELECTRIC and Taegu Broadcasting go up and down completely randomly.
Pair Corralation between SEOJEON ELECTRIC and Taegu Broadcasting
Assuming the 90 days trading horizon SEOJEON ELECTRIC MACHINERY is expected to generate 1.71 times more return on investment than Taegu Broadcasting. However, SEOJEON ELECTRIC is 1.71 times more volatile than Taegu Broadcasting. It trades about -0.07 of its potential returns per unit of risk. Taegu Broadcasting is currently generating about -0.41 per unit of risk. If you would invest 512,000 in SEOJEON ELECTRIC MACHINERY on November 18, 2024 and sell it today you would lose (23,000) from holding SEOJEON ELECTRIC MACHINERY or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEOJEON ELECTRIC MACHINERY vs. Taegu Broadcasting
Performance |
| Timeline |
| SEOJEON ELECTRIC MAC |
| Taegu Broadcasting |
SEOJEON ELECTRIC and Taegu Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEOJEON ELECTRIC and Taegu Broadcasting
The main advantage of trading using opposite SEOJEON ELECTRIC and Taegu Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEOJEON ELECTRIC position performs unexpectedly, Taegu Broadcasting 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 Taegu Broadcasting will offset losses from the drop in Taegu Broadcasting's long position.| SEOJEON ELECTRIC vs. Kukdo Chemical Co | SEOJEON ELECTRIC vs. PJ Metal Co | SEOJEON ELECTRIC vs. Daiyang Metal Co | SEOJEON ELECTRIC vs. Kg Chemical |
| Taegu Broadcasting vs. Dongnam Chemical Co | Taegu Broadcasting vs. Sungmoon Electronics Co | Taegu Broadcasting vs. Korea Petro Chemical | Taegu Broadcasting vs. Jahwa Electronics 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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