Correlation Between Seah Steel and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both Seah Steel and KEPCO Engineering 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 KEPCO Engineering 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 KEPCO Engineering Construction, you can compare the effects of market volatilities on Seah Steel and KEPCO Engineering 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 KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and KEPCO Engineering.
Diversification Opportunities for Seah Steel and KEPCO Engineering
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seah and KEPCO is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering 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 KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of Seah Steel i.e., Seah Steel and KEPCO Engineering go up and down completely randomly.
Pair Corralation between Seah Steel and KEPCO Engineering
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 0.51 times more return on investment than KEPCO Engineering. However, Seah Steel Corp is 1.96 times less risky than KEPCO Engineering. It trades about -0.03 of its potential returns per unit of risk. KEPCO Engineering Construction is currently generating about -0.31 per unit of risk. If you would invest 11,920,000 in Seah Steel Corp on September 12, 2024 and sell it today you would lose (210,000) from holding Seah Steel Corp or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Seah Steel Corp vs. KEPCO Engineering Construction
Performance |
| Timeline |
| Seah Steel Corp |
| KEPCO Engineering |
Seah Steel and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and KEPCO Engineering
The main advantage of trading using opposite Seah Steel and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.| Seah Steel vs. Iljin Display | Seah Steel vs. Hana Financial | Seah Steel vs. DB Financial Investment | Seah Steel vs. Genie Music |
| KEPCO Engineering vs. Hyundai Engineering Construction | KEPCO Engineering vs. Camus Engineering Construction | KEPCO Engineering vs. Solution Advanced Technology | KEPCO Engineering vs. Busan Industrial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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