Correlation Between CS BEARING and Seoam Machinery

Can any of the company-specific risk be diversified away by investing in both CS BEARING and Seoam Machinery 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 CS BEARING and Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CS BEARING CoLtd and Seoam Machinery Industry, you can compare the effects of market volatilities on CS BEARING and Seoam Machinery 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 CS BEARING with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of CS BEARING and Seoam Machinery.

Diversification Opportunities for CS BEARING and Seoam Machinery

0.49

Correlation Coefficient

CS BEARING  Seoam Machinery

Very weak diversification

The 3 months correlation between 297090 and Seoam is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CS BEARING CoLtd and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry and CS BEARING 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 CS BEARING CoLtd are associated (or correlated) with Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of CS BEARING i.e., CS BEARING and Seoam Machinery go up and down completely randomly.

Pair Corralation between CS BEARING and Seoam Machinery

Assuming the 90 days trading horizon CS BEARING CoLtd is expected to generate 2.33 times more return on investment than Seoam Machinery. However, CS BEARING is 2.33 times more volatile than Seoam Machinery Industry. It trades about 0.17 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.03 per unit of risk. If you would invest  466,000  in CS BEARING CoLtd on December 2, 2024 and sell it today you would earn a total of  114,000  from holding CS BEARING CoLtd or generate 24.46% return on investment over 90 days.

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

CS BEARING CoLtd  vs.  Seoam Machinery Industry

CS BEARING CoLtd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CS BEARING CoLtd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CS BEARING sustained solid returns over the last few months and may actually be approaching a breakup point.

Seoam Machinery Industry

Risk-Adjusted Performance

Weak

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

Pair Trading with CS BEARING and Seoam Machinery

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

The idea behind CS BEARING CoLtd and Seoam Machinery Industry 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.