Correlation Between Eugene Investment and SEOJEON ELECTRIC

Can any of the company-specific risk be diversified away by investing in both Eugene Investment and SEOJEON ELECTRIC 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 Eugene Investment and SEOJEON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eugene Investment Securities and SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Eugene Investment and SEOJEON ELECTRIC 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 Eugene Investment with a short position of SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eugene Investment and SEOJEON ELECTRIC.

Diversification Opportunities for Eugene Investment and SEOJEON ELECTRIC

0.45

Correlation Coefficient

Eugene Investment  SEOJEON ELECTRIC

Very weak diversification

The 3 months correlation between Eugene and SEOJEON is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Investment Securities and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC and Eugene Investment 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 Eugene Investment Securities are associated (or correlated) with SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Eugene Investment i.e., Eugene Investment and SEOJEON ELECTRIC go up and down completely randomly.

Pair Corralation between Eugene Investment and SEOJEON ELECTRIC

Assuming the 90 days trading horizon Eugene Investment Securities is expected to under-perform the SEOJEON ELECTRIC. But the stock apears to be less risky and, when comparing its historical volatility, Eugene Investment Securities is 1.15 times less risky than SEOJEON ELECTRIC. The stock trades about -0.23 of its potential returns per unit of risk. The SEOJEON ELECTRIC MACHINERY is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  473,000  in SEOJEON ELECTRIC MACHINERY on September 23, 2024 and sell it today you would lose (82,500) from holding SEOJEON ELECTRIC MACHINERY or give up 17.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eugene Investment Securities  vs.  SEOJEON ELECTRIC MACHINERY

Eugene Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eugene Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SEOJEON ELECTRIC MAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEOJEON ELECTRIC MACHINERY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eugene Investment and SEOJEON ELECTRIC

The main advantage of trading using opposite Eugene Investment and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eugene Investment position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.

The idea behind Eugene Investment Securities and SEOJEON ELECTRIC MACHINERY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.