Correlation Between Seoul Electronics and Daol Investment

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

By analyzing existing cross correlation between Seoul Electronics Telecom and Daol Investment Securities, you can compare the effects of market volatilities on Seoul Electronics and Daol Investment 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 Seoul Electronics with a short position of Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Daol Investment.

Diversification Opportunities for Seoul Electronics and Daol Investment

-0.45

Correlation Coefficient

Seoul Electronics  Daol Investment

Very good diversification

The 3 months correlation between Seoul and Daol is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu and Seoul Electronics 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 Seoul Electronics Telecom are associated (or correlated) with Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Daol Investment go up and down completely randomly.

Pair Corralation between Seoul Electronics and Daol Investment

Assuming the 90 days trading horizon Seoul Electronics is expected to generate 8.55 times less return on investment than Daol Investment. In addition to that, Seoul Electronics is 2.35 times more volatile than Daol Investment Securities. It trades about 0.01 of its total potential returns per unit of risk. Daol Investment Securities is currently generating about 0.12 per unit of volatility. If you would invest  298,619  in Daol Investment Securities on December 28, 2024 and sell it today you would earn a total of  45,881  from holding Daol Investment Securities or generate 15.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Seoul Electronics Telecom  vs.  Daol Investment Securities

Seoul Electronics Telecom

Risk-Adjusted Performance

Very Weak

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

Daol Investment Secu

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daol Investment Securities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daol Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seoul Electronics and Daol Investment

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

The idea behind Seoul Electronics Telecom and Daol Investment Securities 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.