Correlation Between Seoul Broadcasting and Xavis

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

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

Diversification Opportunities for Seoul Broadcasting and Xavis

-0.5

Correlation Coefficient

Seoul Broadcasting  Xavis

Very good diversification

The 3 months correlation between Seoul and Xavis is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Broadcasting System and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis and Seoul Broadcasting 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 Broadcasting System are associated (or correlated) with Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Seoul Broadcasting i.e., Seoul Broadcasting and Xavis go up and down completely randomly.

Pair Corralation between Seoul Broadcasting and Xavis

Assuming the 90 days trading horizon Seoul Broadcasting System is expected to under-perform the Xavis. In addition to that, Seoul Broadcasting is 2.63 times more volatile than Xavis Co. It trades about -0.08 of its total potential returns per unit of risk. Xavis Co is currently generating about 0.11 per unit of volatility. If you would invest  129,100  in Xavis Co on October 24, 2024 and sell it today you would earn a total of  4,300  from holding Xavis Co or generate 3.33% return on investment over 90 days.

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

Seoul Broadcasting System  vs.  Xavis Co

Seoul Broadcasting System

Risk-Adjusted Performance

12 of 100

Good

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

Xavis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xavis Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Seoul Broadcasting and Xavis

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

The idea behind Seoul Broadcasting System and Xavis 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.