Correlation Between INNOX Advanced and Seoul Food
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Seoul Food 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 INNOX Advanced and Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and Seoul Food Industrial, you can compare the effects of market volatilities on INNOX Advanced and Seoul Food 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 INNOX Advanced with a short position of Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Seoul Food.
Diversification Opportunities for INNOX Advanced and Seoul Food
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INNOX and Seoul is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Seoul Food go up and down completely randomly.
Pair Corralation between INNOX Advanced and Seoul Food
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 2.4 times more return on investment than Seoul Food. However, INNOX Advanced is 2.4 times more volatile than Seoul Food Industrial. It trades about 0.38 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about 0.11 per unit of risk. If you would invest 1,971,181 in INNOX Advanced Materials on October 12, 2024 and sell it today you would earn a total of 378,819 from holding INNOX Advanced Materials or generate 19.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Seoul Food Industrial
Performance |
| Timeline |
| INNOX Advanced Materials |
| Seoul Food Industrial |
INNOX Advanced and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Seoul Food
The main advantage of trading using opposite INNOX Advanced and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, Seoul Food 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 Food will offset losses from the drop in Seoul Food's long position.| INNOX Advanced vs. CU Medical Systems | INNOX Advanced vs. PJ Metal Co | INNOX Advanced vs. Seoyon Topmetal Co | INNOX Advanced vs. Hyundai Industrial Co |
| Seoul Food vs. Industrial Bank | Seoul Food vs. Songwon Industrial Co | Seoul Food vs. Seoul Electronics Telecom | Seoul Food vs. Drb 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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