Correlation Between Seah Steel and KM
Can any of the company-specific risk be diversified away by investing in both Seah Steel and KM 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 Seah Steel and KM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seah Steel Corp and KM Corporation, you can compare the effects of market volatilities on Seah Steel and KM 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 Seah Steel with a short position of KM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and KM.
Diversification Opportunities for Seah Steel and KM
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seah and KM is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and KM Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KM Corporation and Seah Steel 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 Seah Steel Corp are associated (or correlated) with KM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KM Corporation has no effect on the direction of Seah Steel i.e., Seah Steel and KM go up and down completely randomly.
Pair Corralation between Seah Steel and KM
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 1.09 times more return on investment than KM. However, Seah Steel is 1.09 times more volatile than KM Corporation. It trades about 0.28 of its potential returns per unit of risk. KM Corporation is currently generating about 0.03 per unit of risk. If you would invest 11,880,000 in Seah Steel Corp on December 2, 2024 and sell it today you would earn a total of 4,190,000 from holding Seah Steel Corp or generate 35.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Seah Steel Corp vs. KM Corp.
Performance |
Timeline |
Seah Steel Corp |
KM Corporation |
Seah Steel and KM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seah Steel and KM
The main advantage of trading using opposite Seah Steel and KM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, KM 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 KM will offset losses from the drop in KM's long position.Seah Steel vs. Kisan Telecom Co | Seah Steel vs. Alton Sports CoLtd | Seah Steel vs. Inzi Display CoLtd | Seah Steel vs. PlayD Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |