Correlation Between Eugene Technology and Seoyon Topmetal

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

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

Diversification Opportunities for Eugene Technology and Seoyon Topmetal

0.47

Correlation Coefficient

Eugene Technology  Seoyon Topmetal

Very weak diversification

The 3 months correlation between Eugene and Seoyon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd and Seoyon Topmetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoyon Topmetal and Eugene Technology 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 Eugene Technology CoLtd are associated (or correlated) with Seoyon Topmetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoyon Topmetal has no effect on the direction of Eugene Technology i.e., Eugene Technology and Seoyon Topmetal go up and down completely randomly.

Pair Corralation between Eugene Technology and Seoyon Topmetal

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to generate 2.22 times more return on investment than Seoyon Topmetal. However, Eugene Technology is 2.22 times more volatile than Seoyon Topmetal Co. It trades about 0.18 of its potential returns per unit of risk. Seoyon Topmetal Co is currently generating about 0.29 per unit of risk. If you would invest  3,380,000  in Eugene Technology CoLtd on October 11, 2024 and sell it today you would earn a total of  415,000  from holding Eugene Technology CoLtd or generate 12.28% return on investment over 90 days.

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

Eugene Technology CoLtd  vs.  Seoyon Topmetal Co

Eugene Technology CoLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Technology CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eugene Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Seoyon Topmetal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eugene Technology and Seoyon Topmetal

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

The idea behind Eugene Technology CoLtd and Seoyon Topmetal 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.