Correlation Between Seoul Semiconductor and ITM Semiconductor

Can any of the company-specific risk be diversified away by investing in both Seoul Semiconductor and ITM Semiconductor 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 ITM Semiconductor 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 ITM Semiconductor Co, you can compare the effects of market volatilities on Seoul Semiconductor and ITM Semiconductor 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 ITM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Semiconductor and ITM Semiconductor.

Diversification Opportunities for Seoul Semiconductor and ITM Semiconductor

0.33

Correlation Coefficient

Seoul Semiconductor  ITM Semiconductor

Weak diversification

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

Pair Corralation between Seoul Semiconductor and ITM Semiconductor

Assuming the 90 days trading horizon Seoul Semiconductor Co is expected to under-perform the ITM Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Semiconductor Co is 1.88 times less risky than ITM Semiconductor. The stock trades about -0.12 of its potential returns per unit of risk. The ITM Semiconductor Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,275,000  in ITM Semiconductor Co on December 30, 2024 and sell it today you would lose (123,000) from holding ITM Semiconductor Co or give up 9.65% of portfolio value over 90 days.

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

Seoul Semiconductor Co  vs.  ITM Semiconductor Co

Seoul Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seoul Semiconductor 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.

ITM Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITM Semiconductor 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 Seoul Semiconductor and ITM Semiconductor

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

The idea behind Seoul Semiconductor Co and ITM Semiconductor 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.