Correlation Between SK Chemicals and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both SK Chemicals 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 SK Chemicals and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and Seoul Electronics Telecom, you can compare the effects of market volatilities on SK Chemicals 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 SK Chemicals with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Seoul Electronics.
Diversification Opportunities for SK Chemicals and Seoul Electronics
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 28513K and Seoul is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals 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 SK Chemicals 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 SK Chemicals 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 SK Chemicals i.e., SK Chemicals and Seoul Electronics go up and down completely randomly.
Pair Corralation between SK Chemicals and Seoul Electronics
Assuming the 90 days trading horizon SK Chemicals Co is expected to under-perform the Seoul Electronics. But the stock apears to be less risky and, when comparing its historical volatility, SK Chemicals Co is 3.27 times less risky than Seoul Electronics. The stock trades about -0.26 of its potential returns per unit of risk. The Seoul Electronics Telecom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 23,300 in Seoul Electronics Telecom on November 3, 2024 and sell it today you would earn a total of 500.00 from holding Seoul Electronics Telecom or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Seoul Electronics Telecom
Performance |
| Timeline |
| SK Chemicals |
| Seoul Electronics Telecom |
SK Chemicals and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Seoul Electronics
The main advantage of trading using opposite SK Chemicals and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals 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.| SK Chemicals vs. Mobile Appliance | SK Chemicals vs. Dongkuk Structures Construction | SK Chemicals vs. Kyeryong Construction Industrial | SK Chemicals vs. Lotte Data Communication |
| Seoul Electronics vs. MetaLabs Co | Seoul Electronics vs. Youngsin Metal Industrial | Seoul Electronics vs. DONGKUK TED METAL | Seoul Electronics vs. Shinhan Inverse Copper |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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