Correlation Between Kyeryong Construction and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Kyeryong Construction 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 Kyeryong Construction and Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kyeryong Construction Industrial and Seoam Machinery Industry, you can compare the effects of market volatilities on Kyeryong Construction 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 Kyeryong Construction with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyeryong Construction and Seoam Machinery.
Diversification Opportunities for Kyeryong Construction and Seoam Machinery
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kyeryong and Seoam is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kyeryong Construction Industri 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 Kyeryong Construction 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 Kyeryong Construction Industrial 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 Kyeryong Construction i.e., Kyeryong Construction and Seoam Machinery go up and down completely randomly.
Pair Corralation between Kyeryong Construction and Seoam Machinery
Assuming the 90 days trading horizon Kyeryong Construction Industrial is expected to under-perform the Seoam Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Kyeryong Construction Industrial is 3.33 times less risky than Seoam Machinery. The stock trades about -0.19 of its potential returns per unit of risk. The Seoam Machinery Industry is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 385,500 in Seoam Machinery Industry on September 12, 2024 and sell it today you would lose (45,000) from holding Seoam Machinery Industry or give up 11.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Kyeryong Construction Industri vs. Seoam Machinery Industry
Performance |
Timeline |
Kyeryong Construction |
Seoam Machinery Industry |
Kyeryong Construction and Seoam Machinery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kyeryong Construction and Seoam Machinery
The main advantage of trading using opposite Kyeryong Construction and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyeryong Construction 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.Kyeryong Construction vs. Samsung Electronics Co | Kyeryong Construction vs. Samsung Electronics Co | Kyeryong Construction vs. SK Hynix | Kyeryong Construction vs. POSCO Holdings |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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