Correlation Between Seoam Machinery and Air Busan
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery and Air Busan 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 Seoam Machinery and Air Busan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoam Machinery Industry and Air Busan Co, you can compare the effects of market volatilities on Seoam Machinery and Air Busan 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 Seoam Machinery with a short position of Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and Air Busan.
Diversification Opportunities for Seoam Machinery and Air Busan
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoam and Air is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan and Seoam Machinery 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 Seoam Machinery Industry are associated (or correlated) with Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of Seoam Machinery i.e., Seoam Machinery and Air Busan go up and down completely randomly.
Pair Corralation between Seoam Machinery and Air Busan
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to generate 1.5 times more return on investment than Air Busan. However, Seoam Machinery is 1.5 times more volatile than Air Busan Co. It trades about -0.1 of its potential returns per unit of risk. Air Busan Co is currently generating about -0.15 per unit of risk. If you would invest 401,000 in Seoam Machinery Industry on September 24, 2024 and sell it today you would lose (35,500) from holding Seoam Machinery Industry or give up 8.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Seoam Machinery Industry vs. Air Busan Co
Performance |
Timeline |
Seoam Machinery Industry |
Air Busan |
Seoam Machinery and Air Busan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seoam Machinery and Air Busan
The main advantage of trading using opposite Seoam Machinery and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.Seoam Machinery vs. Rainbow Robotics | Seoam Machinery vs. COWINTECH Co | Seoam Machinery vs. CS BEARING CoLtd | Seoam Machinery vs. Young Poong Precision |
Air Busan vs. Kbi Metal Co | Air Busan vs. KEPCO Engineering Construction | Air Busan vs. Seoyon Topmetal Co | Air Busan vs. Seoam Machinery Industry |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |