Correlation Between Solution Advanced and Seoul Broadcasting
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Seoul Broadcasting 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 Solution Advanced and Seoul Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Seoul Broadcasting System, you can compare the effects of market volatilities on Solution Advanced and Seoul Broadcasting 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 Solution Advanced with a short position of Seoul Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Seoul Broadcasting.
Diversification Opportunities for Solution Advanced and Seoul Broadcasting
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Solution and Seoul is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Seoul Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Broadcasting System and Solution 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 Solution Advanced Technology are associated (or correlated) with Seoul Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Broadcasting System has no effect on the direction of Solution Advanced i.e., Solution Advanced and Seoul Broadcasting go up and down completely randomly.
Pair Corralation between Solution Advanced and Seoul Broadcasting
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 2.09 times more return on investment than Seoul Broadcasting. However, Solution Advanced is 2.09 times more volatile than Seoul Broadcasting System. It trades about 0.14 of its potential returns per unit of risk. Seoul Broadcasting System is currently generating about -0.01 per unit of risk. If you would invest 144,700 in Solution Advanced Technology on September 4, 2024 and sell it today you would earn a total of 7,900 from holding Solution Advanced Technology or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Seoul Broadcasting System
Performance |
| Timeline |
| Solution Advanced |
| Seoul Broadcasting System |
Solution Advanced and Seoul Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Seoul Broadcasting
The main advantage of trading using opposite Solution Advanced and Seoul Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Seoul Broadcasting 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 Broadcasting will offset losses from the drop in Seoul Broadcasting's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Seoul Broadcasting vs. Korea New Network | Seoul Broadcasting vs. ICD Co | Seoul Broadcasting vs. DYPNF CoLtd | Seoul Broadcasting 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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