Correlation Between Seoul Food and Eagon Industrial

Can any of the company-specific risk be diversified away by investing in both Seoul Food and Eagon 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 Seoul Food and Eagon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seoul Food Industrial and Eagon Industrial Co, you can compare the effects of market volatilities on Seoul Food and Eagon 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 Seoul Food with a short position of Eagon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Eagon Industrial.

Diversification Opportunities for Seoul Food and Eagon Industrial

-0.25

Correlation Coefficient

Seoul Food  Eagon Industrial

Very good diversification

The 3 months correlation between Seoul and Eagon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Eagon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagon Industrial and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with Eagon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagon Industrial has no effect on the direction of Seoul Food i.e., Seoul Food and Eagon Industrial go up and down completely randomly.

Pair Corralation between Seoul Food and Eagon Industrial

Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Eagon Industrial. In addition to that, Seoul Food is 1.25 times more volatile than Eagon Industrial Co. It trades about -0.04 of its total potential returns per unit of risk. Eagon Industrial Co is currently generating about 0.12 per unit of volatility. If you would invest  492,346  in Eagon Industrial Co on October 6, 2024 and sell it today you would earn a total of  33,654  from holding Eagon Industrial Co or generate 6.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Seoul Food Industrial  vs.  Eagon Industrial Co

Seoul Food Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seoul Food Industrial 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.

Eagon Industrial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagon Industrial Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eagon Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Seoul Food and Eagon Industrial

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

The idea behind Seoul Food Industrial and Eagon Industrial Co 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.