Correlation Between SIMMTECH and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both SIMMTECH and Seoul Electronics 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 SIMMTECH and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and Seoul Electronics Telecom, you can compare the effects of market volatilities on SIMMTECH and Seoul Electronics 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 SIMMTECH with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and Seoul Electronics.
Diversification Opportunities for SIMMTECH and Seoul Electronics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIMMTECH and Seoul is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom and SIMMTECH 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 SIMMTECH Co are associated (or correlated) with Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of SIMMTECH i.e., SIMMTECH and Seoul Electronics go up and down completely randomly.
Pair Corralation between SIMMTECH and Seoul Electronics
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Seoul Electronics. In addition to that, SIMMTECH is 2.18 times more volatile than Seoul Electronics Telecom. It trades about -0.43 of its total potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.17 per unit of volatility. If you would invest 26,700 in Seoul Electronics Telecom on August 25, 2024 and sell it today you would lose (1,400) from holding Seoul Electronics Telecom or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. Seoul Electronics Telecom
Performance |
| Timeline |
| SIMMTECH |
| Seoul Electronics Telecom |
SIMMTECH and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and Seoul Electronics
The main advantage of trading using opposite SIMMTECH and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| SIMMTECH vs. People Technology | SIMMTECH vs. iNtRON Biotechnology | SIMMTECH vs. Hanjin Transportation Co | SIMMTECH vs. Alton Sports CoLtd |
| Seoul Electronics vs. CKH Food Health | Seoul Electronics vs. TK Chemical | Seoul Electronics vs. Golden Bridge Investment | Seoul Electronics vs. Tae Kyung Chemical |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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