Correlation Between SeAH Besteel and Cheryong Electric

Can any of the company-specific risk be diversified away by investing in both SeAH Besteel and Cheryong 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 SeAH Besteel and Cheryong Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SeAH Besteel Corp and Cheryong Electric CoLtd, you can compare the effects of market volatilities on SeAH Besteel and Cheryong 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 SeAH Besteel with a short position of Cheryong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeAH Besteel and Cheryong Electric.

Diversification Opportunities for SeAH Besteel and Cheryong Electric

-0.39

Correlation Coefficient

SeAH Besteel  Cheryong Electric

Very good diversification

The 3 months correlation between SeAH and Cheryong is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SeAH Besteel Corp and Cheryong Electric CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Electric CoLtd and SeAH Besteel 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 SeAH Besteel Corp are associated (or correlated) with Cheryong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Electric CoLtd has no effect on the direction of SeAH Besteel i.e., SeAH Besteel and Cheryong Electric go up and down completely randomly.

Pair Corralation between SeAH Besteel and Cheryong Electric

Assuming the 90 days trading horizon SeAH Besteel is expected to generate 1.95 times less return on investment than Cheryong Electric. But when comparing it to its historical volatility, SeAH Besteel Corp is 1.14 times less risky than Cheryong Electric. It trades about 0.03 of its potential returns per unit of risk. Cheryong Electric CoLtd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,227,223  in Cheryong Electric CoLtd on October 24, 2024 and sell it today you would earn a total of  322,777  from holding Cheryong Electric CoLtd or generate 6.17% return on investment over 90 days.

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

SeAH Besteel Corp  vs.  Cheryong Electric CoLtd

SeAH Besteel Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SeAH Besteel Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SeAH Besteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cheryong Electric CoLtd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheryong Electric CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cheryong Electric may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SeAH Besteel and Cheryong Electric

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

The idea behind SeAH Besteel Corp and Cheryong Electric CoLtd 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.