Correlation Between Sangshin Electronics and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Sangshin Electronics and Seoul Electronics 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 Sangshin Electronics and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sangshin Electronics Co and Seoul Electronics Telecom, you can compare the effects of market volatilities on Sangshin Electronics and Seoul Electronics 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 Sangshin Electronics with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangshin Electronics and Seoul Electronics.
Diversification Opportunities for Sangshin Electronics and Seoul Electronics
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sangshin and Seoul is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sangshin Electronics Co and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom and Sangshin Electronics 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 Sangshin Electronics Co are associated (or correlated) with Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Sangshin Electronics i.e., Sangshin Electronics and Seoul Electronics go up and down completely randomly.
Pair Corralation between Sangshin Electronics and Seoul Electronics
Assuming the 90 days trading horizon Sangshin Electronics Co is expected to generate 0.82 times more return on investment than Seoul Electronics. However, Sangshin Electronics Co is 1.23 times less risky than Seoul Electronics. It trades about -0.03 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.21 per unit of risk. If you would invest 289,500 in Sangshin Electronics Co on September 24, 2024 and sell it today you would lose (5,000) from holding Sangshin Electronics Co or give up 1.73% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sangshin Electronics Co vs. Seoul Electronics Telecom
Performance |
Timeline |
Sangshin Electronics |
Seoul Electronics Telecom |
Sangshin Electronics and Seoul Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sangshin Electronics and Seoul Electronics
The main advantage of trading using opposite Sangshin Electronics and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sangshin Electronics position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.Sangshin Electronics vs. Daejoo Electronic Materials | Sangshin Electronics vs. Parksystems Corp | Sangshin Electronics vs. BH Co | Sangshin Electronics vs. Partron Co |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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