Correlation Between Semyung Electric and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Semyung Electric and Gyeongnam Steel 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 Gyeongnam Steel 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 Gyeongnam Steel Co, you can compare the effects of market volatilities on Semyung Electric and Gyeongnam Steel 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 Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semyung Electric and Gyeongnam Steel.
Diversification Opportunities for Semyung Electric and Gyeongnam Steel
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Semyung and Gyeongnam is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Semyung Electric Machinery and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel 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 Gyeongnam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyeongnam Steel has no effect on the direction of Semyung Electric i.e., Semyung Electric and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Semyung Electric and Gyeongnam Steel
Assuming the 90 days trading horizon Semyung Electric Machinery is expected to generate 1.65 times more return on investment than Gyeongnam Steel. However, Semyung Electric is 1.65 times more volatile than Gyeongnam Steel Co. It trades about 0.04 of its potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.06 per unit of risk. If you would invest 286,266 in Semyung Electric Machinery on September 26, 2024 and sell it today you would earn a total of 189,734 from holding Semyung Electric Machinery or generate 66.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Semyung Electric Machinery vs. Gyeongnam Steel Co
Performance |
Timeline |
Semyung Electric Mac |
Gyeongnam Steel |
Semyung Electric and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Semyung Electric and Gyeongnam Steel
The main advantage of trading using opposite Semyung Electric and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semyung Electric position performs unexpectedly, Gyeongnam Steel 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 Gyeongnam Steel will offset losses from the drop in Gyeongnam Steel's long position.Semyung Electric vs. Dawonsys CoLtd | Semyung Electric vs. Elentec Co | Semyung Electric vs. Robostar CoLtd | Semyung Electric vs. HyVision System |
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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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