Correlation Between Raontech and Sejong Industrial
Can any of the company-specific risk be diversified away by investing in both Raontech and Sejong Industrial 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 Raontech and Sejong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raontech and Sejong Industrial, you can compare the effects of market volatilities on Raontech and Sejong Industrial 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 Raontech with a short position of Sejong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raontech and Sejong Industrial.
Diversification Opportunities for Raontech and Sejong Industrial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Raontech and Sejong is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Raontech and Sejong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Industrial and Raontech 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 Raontech are associated (or correlated) with Sejong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Industrial has no effect on the direction of Raontech i.e., Raontech and Sejong Industrial go up and down completely randomly.
Pair Corralation between Raontech and Sejong Industrial
Assuming the 90 days trading horizon Raontech is expected to under-perform the Sejong Industrial. In addition to that, Raontech is 1.11 times more volatile than Sejong Industrial. It trades about -0.17 of its total potential returns per unit of risk. Sejong Industrial is currently generating about -0.16 per unit of volatility. If you would invest 445,000 in Sejong Industrial on September 4, 2024 and sell it today you would lose (35,500) from holding Sejong Industrial or give up 7.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raontech vs. Sejong Industrial
Performance |
| Timeline |
| Raontech |
| Sejong Industrial |
Raontech and Sejong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raontech and Sejong Industrial
The main advantage of trading using opposite Raontech and Sejong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raontech position performs unexpectedly, Sejong Industrial 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 Sejong Industrial will offset losses from the drop in Sejong Industrial's long position.| Raontech vs. Samsung Electronics Co | Raontech vs. Samsung Electronics Co | Raontech vs. LG Energy Solution | Raontech vs. SK Hynix |
| Sejong Industrial vs. KMH Hitech Co | Sejong Industrial vs. Raontech | Sejong Industrial vs. Hwangkum Steel Technology | Sejong Industrial vs. CU Tech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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