Correlation Between Seoul Semiconductor and KHVATEC CoLtd

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

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

Diversification Opportunities for Seoul Semiconductor and KHVATEC CoLtd

0.28

Correlation Coefficient

Seoul Semiconductor  KHVATEC CoLtd

Modest diversification

The 3 months correlation between Seoul and KHVATEC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Semiconductor Co and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd and Seoul Semiconductor 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 Semiconductor Co are associated (or correlated) with KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of Seoul Semiconductor i.e., Seoul Semiconductor and KHVATEC CoLtd go up and down completely randomly.

Pair Corralation between Seoul Semiconductor and KHVATEC CoLtd

Assuming the 90 days trading horizon Seoul Semiconductor is expected to generate 24.16 times less return on investment than KHVATEC CoLtd. But when comparing it to its historical volatility, Seoul Semiconductor Co is 1.94 times less risky than KHVATEC CoLtd. It trades about 0.01 of its potential returns per unit of risk. KHVATEC CoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  827,702  in KHVATEC CoLtd on December 3, 2024 and sell it today you would earn a total of  115,298  from holding KHVATEC CoLtd or generate 13.93% return on investment over 90 days.

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

Seoul Semiconductor Co  vs.  KHVATEC CoLtd

Seoul Semiconductor

Risk-Adjusted Performance

Weak

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

KHVATEC CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KHVATEC CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KHVATEC CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seoul Semiconductor and KHVATEC CoLtd

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

The idea behind Seoul Semiconductor Co and KHVATEC CoLtd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.