Correlation Between Semyung Electric and Taegu Broadcasting

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

By analyzing existing cross correlation between Semyung Electric Machinery and Taegu Broadcasting, you can compare the effects of market volatilities on Semyung Electric and Taegu Broadcasting 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 Semyung Electric with a short position of Taegu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semyung Electric and Taegu Broadcasting.

Diversification Opportunities for Semyung Electric and Taegu Broadcasting

-0.6

Correlation Coefficient

Semyung Electric  Taegu Broadcasting

Excellent diversification

The 3 months correlation between Semyung and Taegu is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Semyung Electric Machinery and Taegu Broadcasting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taegu Broadcasting and Semyung Electric 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 Semyung Electric Machinery are associated (or correlated) with Taegu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taegu Broadcasting has no effect on the direction of Semyung Electric i.e., Semyung Electric and Taegu Broadcasting go up and down completely randomly.

Pair Corralation between Semyung Electric and Taegu Broadcasting

Assuming the 90 days trading horizon Semyung Electric is expected to generate 37.16 times less return on investment than Taegu Broadcasting. In addition to that, Semyung Electric is 1.32 times more volatile than Taegu Broadcasting. It trades about 0.0 of its total potential returns per unit of risk. Taegu Broadcasting is currently generating about 0.1 per unit of volatility. If you would invest  81,400  in Taegu Broadcasting on September 22, 2024 and sell it today you would earn a total of  4,600  from holding Taegu Broadcasting or generate 5.65% return on investment over 90 days.

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

Semyung Electric Machinery  vs.  Taegu Broadcasting

Semyung Electric Mac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Semyung Electric Machinery 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.

Taegu Broadcasting

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taegu Broadcasting are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taegu Broadcasting sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semyung Electric and Taegu Broadcasting

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

The idea behind Semyung Electric Machinery and Taegu Broadcasting 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.