Correlation Between Seohee Construction and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and SK Chemicals 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 Seohee Construction and SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seohee Construction Co and SK Chemicals Co, you can compare the effects of market volatilities on Seohee Construction and SK Chemicals 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 Seohee Construction with a short position of SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and SK Chemicals.
Diversification Opportunities for Seohee Construction and SK Chemicals
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seohee and 285130 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals and Seohee Construction 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 Seohee Construction Co are associated (or correlated) with SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Seohee Construction i.e., Seohee Construction and SK Chemicals go up and down completely randomly.
Pair Corralation between Seohee Construction and SK Chemicals
Assuming the 90 days trading horizon Seohee Construction Co is expected to generate 0.89 times more return on investment than SK Chemicals. However, Seohee Construction Co is 1.12 times less risky than SK Chemicals. It trades about 0.06 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.12 per unit of risk. If you would invest 150,000 in Seohee Construction Co on September 12, 2024 and sell it today you would earn a total of 8,300 from holding Seohee Construction Co or generate 5.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Seohee Construction Co vs. SK Chemicals Co
Performance |
Timeline |
Seohee Construction |
SK Chemicals |
Seohee Construction and SK Chemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seohee Construction and SK Chemicals
The main advantage of trading using opposite Seohee Construction and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.Seohee Construction vs. Korea New Network | Seohee Construction vs. Solution Advanced Technology | Seohee Construction vs. Busan Industrial Co | Seohee Construction vs. Busan Ind |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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