Correlation Between Sejong Telecom and MEDICOX

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

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

Diversification Opportunities for Sejong Telecom and MEDICOX

-0.33

Correlation Coefficient

Sejong Telecom  MEDICOX

Very good diversification

The 3 months correlation between Sejong and MEDICOX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and MEDICOX Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICOX and Sejong Telecom 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 Sejong Telecom are associated (or correlated) with MEDICOX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICOX has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and MEDICOX go up and down completely randomly.

Pair Corralation between Sejong Telecom and MEDICOX

Assuming the 90 days trading horizon Sejong Telecom is expected to generate 0.21 times more return on investment than MEDICOX. However, Sejong Telecom is 4.78 times less risky than MEDICOX. It trades about -0.01 of its potential returns per unit of risk. MEDICOX Co is currently generating about -0.02 per unit of risk. If you would invest  42,200  in Sejong Telecom on December 4, 2024 and sell it today you would lose (700.00) from holding Sejong Telecom or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Sejong Telecom  vs.  MEDICOX Co

Sejong Telecom

Risk-Adjusted Performance

Very Weak

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

MEDICOX

Risk-Adjusted Performance

Very Weak

Over the last 90 days MEDICOX Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sejong Telecom and MEDICOX

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

The idea behind Sejong Telecom and MEDICOX 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.