Correlation Between Korea Alcohol and Semyung Electric
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Semyung 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 Korea Alcohol and Semyung Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Alcohol Industrial and Semyung Electric Machinery, you can compare the effects of market volatilities on Korea Alcohol and Semyung 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 Korea Alcohol with a short position of Semyung Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Semyung Electric.
Diversification Opportunities for Korea Alcohol and Semyung Electric
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Semyung is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Semyung Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semyung Electric Mac and Korea Alcohol 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 Korea Alcohol Industrial are associated (or correlated) with Semyung Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semyung Electric Mac has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Semyung Electric go up and down completely randomly.
Pair Corralation between Korea Alcohol and Semyung Electric
Assuming the 90 days trading horizon Korea Alcohol is expected to generate 1.44 times less return on investment than Semyung Electric. But when comparing it to its historical volatility, Korea Alcohol Industrial is 5.1 times less risky than Semyung Electric. It trades about 0.24 of its potential returns per unit of risk. Semyung Electric Machinery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 473,220 in Semyung Electric Machinery on December 23, 2024 and sell it today you would earn a total of 67,780 from holding Semyung Electric Machinery or generate 14.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Korea Alcohol Industrial vs. Semyung Electric Machinery
Performance |
Timeline |
Korea Alcohol Industrial |
Semyung Electric Mac |
Korea Alcohol and Semyung Electric Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea Alcohol and Semyung Electric
The main advantage of trading using opposite Korea Alcohol and Semyung Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Semyung 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 Semyung Electric will offset losses from the drop in Semyung Electric's long position.Korea Alcohol vs. Samyang Foods Co | Korea Alcohol vs. Mirai Semiconductors Co | Korea Alcohol vs. FoodNamoo | Korea Alcohol vs. Hankukpackage Co |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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