Correlation Between Coloray International and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Coloray International and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on Coloray International and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Seoam Machinery.
Diversification Opportunities for Coloray International and Seoam Machinery
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Coloray and Seoam is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Coloray International i.e., Coloray International and Seoam Machinery go up and down completely randomly.
Pair Corralation between Coloray International and Seoam Machinery
Assuming the 90 days trading horizon Coloray International Investment is expected to under-perform the Seoam Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Coloray International Investment is 1.02 times less risky than Seoam Machinery. The stock trades about -0.17 of its potential returns per unit of risk. The Seoam Machinery Industry is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 377,000 in Seoam Machinery Industry on August 29, 2024 and sell it today you would earn a total of 25,000 from holding Seoam Machinery Industry or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. Seoam Machinery Industry
Performance |
| Timeline |
| Coloray International |
| Seoam Machinery Industry |
Coloray International and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and Seoam Machinery
The main advantage of trading using opposite Coloray International and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| Coloray International vs. Hanjin Transportation Co | Coloray International vs. Daiyang Metal Co | Coloray International vs. Heungkuk Metaltech CoLtd | Coloray International vs. DONGKUK TED METAL |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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