Correlation Between DRGEM and Seegene
Can any of the company-specific risk be diversified away by investing in both DRGEM and Seegene 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 DRGEM and Seegene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRGEM and Seegene, you can compare the effects of market volatilities on DRGEM and Seegene 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 DRGEM with a short position of Seegene. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRGEM and Seegene.
Diversification Opportunities for DRGEM and Seegene
Very poor diversification
The 3 months correlation between DRGEM and Seegene is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding DRGEM and Seegene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seegene and DRGEM 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 DRGEM are associated (or correlated) with Seegene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seegene has no effect on the direction of DRGEM i.e., DRGEM and Seegene go up and down completely randomly.
Pair Corralation between DRGEM and Seegene
Assuming the 90 days trading horizon DRGEM is expected to under-perform the Seegene. In addition to that, DRGEM is 1.35 times more volatile than Seegene. It trades about -0.06 of its total potential returns per unit of risk. Seegene is currently generating about 0.0 per unit of volatility. If you would invest 2,390,000 in Seegene on September 1, 2024 and sell it today you would lose (15,000) from holding Seegene or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
DRGEM vs. Seegene
Performance |
| Timeline |
| DRGEM |
| Seegene |
DRGEM and Seegene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRGEM and Seegene
The main advantage of trading using opposite DRGEM and Seegene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRGEM position performs unexpectedly, Seegene 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 Seegene will offset losses from the drop in Seegene's long position.| DRGEM vs. Cheryong Industrial CoLtd | DRGEM vs. Hyundai Industrial Co | DRGEM vs. SM Entertainment Co | DRGEM vs. Sejong Industrial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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