Correlation Between Seah Steel and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Korea Shipbuilding 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 Seah Steel and Korea Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seah Steel Corp and Korea Shipbuilding Offshore, you can compare the effects of market volatilities on Seah Steel and Korea Shipbuilding 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 Seah Steel with a short position of Korea Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Korea Shipbuilding.
Diversification Opportunities for Seah Steel and Korea Shipbuilding
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seah and Korea is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding and Seah Steel 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 Seah Steel Corp are associated (or correlated) with Korea Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Shipbuilding has no effect on the direction of Seah Steel i.e., Seah Steel and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between Seah Steel and Korea Shipbuilding
Assuming the 90 days trading horizon Seah Steel is expected to generate 14.06 times less return on investment than Korea Shipbuilding. But when comparing it to its historical volatility, Seah Steel Corp is 2.25 times less risky than Korea Shipbuilding. It trades about 0.05 of its potential returns per unit of risk. Korea Shipbuilding Offshore is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 19,600,000 in Korea Shipbuilding Offshore on October 11, 2024 and sell it today you would earn a total of 3,900,000 from holding Korea Shipbuilding Offshore or generate 19.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
| Seah Steel Corp |
| Korea Shipbuilding |
Seah Steel and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Korea Shipbuilding
The main advantage of trading using opposite Seah Steel and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Korea Shipbuilding 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 Korea Shipbuilding will offset losses from the drop in Korea Shipbuilding's long position.| Seah Steel vs. Hyundai Home Shopping | Seah Steel vs. Asia Technology Co | Seah Steel vs. ENF Technology Co | Seah Steel vs. Ilji Technology Co |
| Korea Shipbuilding vs. SEOJEON ELECTRIC MACHINERY | Korea Shipbuilding vs. Mirai Semiconductors Co | Korea Shipbuilding vs. Kyeryong Construction Industrial | Korea Shipbuilding vs. Hansol Homedeco Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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