Correlation Between Kyung Chang and Seoul Semiconductor

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

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

Diversification Opportunities for Kyung Chang and Seoul Semiconductor

0.53

Correlation Coefficient

Kyung Chang  Seoul Semiconductor

Very weak diversification

The 3 months correlation between Kyung and Seoul is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and Seoul Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Semiconductor and Kyung Chang 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 Kyung Chang Industrial are associated (or correlated) with Seoul Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Semiconductor has no effect on the direction of Kyung Chang i.e., Kyung Chang and Seoul Semiconductor go up and down completely randomly.

Pair Corralation between Kyung Chang and Seoul Semiconductor

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the Seoul Semiconductor. In addition to that, Kyung Chang is 1.22 times more volatile than Seoul Semiconductor Co. It trades about -0.02 of its total potential returns per unit of risk. Seoul Semiconductor Co is currently generating about 0.02 per unit of volatility. If you would invest  682,330  in Seoul Semiconductor Co on December 2, 2024 and sell it today you would earn a total of  6,670  from holding Seoul Semiconductor Co or generate 0.98% return on investment over 90 days.

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

Kyung Chang Industrial  vs.  Seoul Semiconductor Co

Kyung Chang Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kyung Chang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kyung Chang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Seoul Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seoul Semiconductor Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Seoul Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kyung Chang and Seoul Semiconductor

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

The idea behind Kyung Chang Industrial and Seoul Semiconductor 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.