Correlation Between Orbitech and Seohee Construction

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

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

Diversification Opportunities for Orbitech and Seohee Construction

-0.03

Correlation Coefficient

Orbitech  Seohee Construction

Good diversification

The 3 months correlation between Orbitech and Seohee is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction and Orbitech 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 Orbitech Co are associated (or correlated) with Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of Orbitech i.e., Orbitech and Seohee Construction go up and down completely randomly.

Pair Corralation between Orbitech and Seohee Construction

Assuming the 90 days trading horizon Orbitech Co is expected to under-perform the Seohee Construction. In addition to that, Orbitech is 1.43 times more volatile than Seohee Construction Co. It trades about -0.01 of its total potential returns per unit of risk. Seohee Construction Co is currently generating about 0.03 per unit of volatility. If you would invest  148,600  in Seohee Construction Co on September 1, 2024 and sell it today you would earn a total of  3,100  from holding Seohee Construction Co or generate 2.09% return on investment over 90 days.

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

Orbitech Co  vs.  Seohee Construction Co

Orbitech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Seohee Construction

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seohee Construction Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Seohee Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orbitech and Seohee Construction

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

The idea behind Orbitech Co and Seohee Construction 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.