Correlation Between Seah Steel and Green Cross
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Green Cross 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 Green Cross 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 Green Cross Lab, you can compare the effects of market volatilities on Seah Steel and Green Cross 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 Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Green Cross.
Diversification Opportunities for Seah Steel and Green Cross
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seah and Green is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Green Cross Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Lab 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 Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Lab has no effect on the direction of Seah Steel i.e., Seah Steel and Green Cross go up and down completely randomly.
Pair Corralation between Seah Steel and Green Cross
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 0.52 times more return on investment than Green Cross. However, Seah Steel Corp is 1.93 times less risky than Green Cross. It trades about 0.02 of its potential returns per unit of risk. Green Cross Lab is currently generating about -0.16 per unit of risk. If you would invest 11,710,000 in Seah Steel Corp on August 29, 2024 and sell it today you would earn a total of 130,000 from holding Seah Steel Corp or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Green Cross Lab
Performance |
| Timeline |
| Seah Steel Corp |
| Green Cross Lab |
Seah Steel and Green Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Green Cross
The main advantage of trading using opposite Seah Steel and Green Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Green Cross 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 Green Cross will offset losses from the drop in Green Cross' long position.| Seah Steel vs. Dong Il Steel | Seah Steel vs. Ajusteel Co | Seah Steel vs. Korea Steel Co | Seah Steel vs. Bookook Steel |
| Green Cross vs. Finebesteel | Green Cross vs. Korea Information Communications | Green Cross vs. Lotte Data Communication | Green Cross vs. Seah Steel Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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