Correlation Between Coloray International and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Coloray International and Seoul Electronics 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 Coloray International and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloray International Investment and Seoul Electronics Telecom, you can compare the effects of market volatilities on Coloray International and Seoul Electronics 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 Coloray International with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Seoul Electronics.
Diversification Opportunities for Coloray International and Seoul Electronics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coloray and Seoul is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom and Coloray International 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 Coloray International Investment are associated (or correlated) with Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Coloray International i.e., Coloray International and Seoul Electronics go up and down completely randomly.
Pair Corralation between Coloray International and Seoul Electronics
Assuming the 90 days trading horizon Coloray International Investment is expected to generate 0.93 times more return on investment than Seoul Electronics. However, Coloray International Investment is 1.07 times less risky than Seoul Electronics. It trades about -0.01 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.06 per unit of risk. If you would invest 109,008 in Coloray International Investment on November 8, 2024 and sell it today you would lose (26,208) from holding Coloray International Investment or give up 24.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Coloray International |
| Seoul Electronics Telecom |
Coloray International and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and Seoul Electronics
The main advantage of trading using opposite Coloray International and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, Seoul Electronics 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 Electronics will offset losses from the drop in Seoul Electronics' long position.| Coloray International vs. LG Chem | Coloray International vs. Chunbo Co | Coloray International vs. DukSan Neolux CoLtd | Coloray International vs. Hyosung Chemical Corp |
| Seoul Electronics vs. Taegu Broadcasting | Seoul Electronics vs. Lotte Non Life Insurance | Seoul Electronics vs. Daesung Industrial Co | Seoul Electronics vs. Sejong Industrial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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