Correlation Between Settlebank and Cafe24 Corp
Can any of the company-specific risk be diversified away by investing in both Settlebank and Cafe24 Corp 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 Settlebank and Cafe24 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Settlebank and Cafe24 Corp, you can compare the effects of market volatilities on Settlebank and Cafe24 Corp 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 Settlebank with a short position of Cafe24 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Settlebank and Cafe24 Corp.
Diversification Opportunities for Settlebank and Cafe24 Corp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Settlebank and Cafe24 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Cafe24 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cafe24 Corp and Settlebank 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 Settlebank are associated (or correlated) with Cafe24 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cafe24 Corp has no effect on the direction of Settlebank i.e., Settlebank and Cafe24 Corp go up and down completely randomly.
Pair Corralation between Settlebank and Cafe24 Corp
Assuming the 90 days trading horizon Settlebank is expected to under-perform the Cafe24 Corp. But the stock apears to be less risky and, when comparing its historical volatility, Settlebank is 1.69 times less risky than Cafe24 Corp. The stock trades about -0.02 of its potential returns per unit of risk. The Cafe24 Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,180,000 in Cafe24 Corp on August 25, 2024 and sell it today you would earn a total of 1,865,000 from holding Cafe24 Corp or generate 158.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Settlebank vs. Cafe24 Corp
Performance |
| Timeline |
| Settlebank |
| Cafe24 Corp |
Settlebank and Cafe24 Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Settlebank and Cafe24 Corp
The main advantage of trading using opposite Settlebank and Cafe24 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Settlebank position performs unexpectedly, Cafe24 Corp 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 Cafe24 Corp will offset losses from the drop in Cafe24 Corp's long position.| Settlebank vs. CKH Food Health | Settlebank vs. SK Chemicals Co | Settlebank vs. Shinsegae Food | Settlebank vs. Echomarketing CoLtd |
| Cafe24 Corp vs. Settlebank | Cafe24 Corp vs. SSR Inc | Cafe24 Corp vs. Busan Industrial Co | Cafe24 Corp vs. Busan Ind |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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