Correlation Between Seoul Semiconductor and Nepes
Can any of the company-specific risk be diversified away by investing in both Seoul Semiconductor and Nepes 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 Seoul Semiconductor and Nepes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Semiconductor Co and Nepes, you can compare the effects of market volatilities on Seoul Semiconductor and Nepes 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 Seoul Semiconductor with a short position of Nepes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Semiconductor and Nepes.
Diversification Opportunities for Seoul Semiconductor and Nepes
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Nepes is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Semiconductor Co and Nepes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepes and Seoul Semiconductor 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 Seoul Semiconductor Co are associated (or correlated) with Nepes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepes has no effect on the direction of Seoul Semiconductor i.e., Seoul Semiconductor and Nepes go up and down completely randomly.
Pair Corralation between Seoul Semiconductor and Nepes
Assuming the 90 days trading horizon Seoul Semiconductor Co is expected to generate 1.16 times more return on investment than Nepes. However, Seoul Semiconductor is 1.16 times more volatile than Nepes. It trades about -0.14 of its potential returns per unit of risk. Nepes is currently generating about -0.18 per unit of risk. If you would invest 919,000 in Seoul Semiconductor Co on September 4, 2024 and sell it today you would lose (224,000) from holding Seoul Semiconductor Co or give up 24.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Seoul Semiconductor Co vs. Nepes
Performance |
Timeline |
Seoul Semiconductor |
Nepes |
Seoul Semiconductor and Nepes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seoul Semiconductor and Nepes
The main advantage of trading using opposite Seoul Semiconductor and Nepes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Semiconductor position performs unexpectedly, Nepes 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 Nepes will offset losses from the drop in Nepes' long position.Seoul Semiconductor vs. Dongsin Engineering Construction | ||
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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