Correlation Between Cloud Air and Seohee Construction

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

By analyzing existing cross correlation between Cloud Air CoLtd and Seohee Construction Co, you can compare the effects of market volatilities on Cloud Air and Seohee Construction 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 Cloud Air with a short position of Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloud Air and Seohee Construction.

Diversification Opportunities for Cloud Air and Seohee Construction

0.56

Correlation Coefficient

Cloud Air  Seohee Construction

Very weak diversification

The 3 months correlation between Cloud and Seohee is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Air CoLtd and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction and Cloud Air 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 Cloud Air CoLtd are associated (or correlated) with Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of Cloud Air i.e., Cloud Air and Seohee Construction go up and down completely randomly.

Pair Corralation between Cloud Air and Seohee Construction

Assuming the 90 days trading horizon Cloud Air CoLtd is expected to generate 1.17 times more return on investment than Seohee Construction. However, Cloud Air is 1.17 times more volatile than Seohee Construction Co. It trades about 0.09 of its potential returns per unit of risk. Seohee Construction Co is currently generating about 0.06 per unit of risk. If you would invest  83,800  in Cloud Air CoLtd on December 1, 2024 and sell it today you would earn a total of  7,900  from holding Cloud Air CoLtd or generate 9.43% return on investment over 90 days.

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

Cloud Air CoLtd  vs.  Seohee Construction Co

Cloud Air CoLtd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cloud Air CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cloud Air may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Seohee Construction

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seohee Construction Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seohee Construction may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cloud Air and Seohee Construction

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

The idea behind Cloud Air CoLtd and Seohee Construction 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..