Correlation Between INtRON Biotechnology and Sejong Telecom

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

By analyzing existing cross correlation between iNtRON Biotechnology and Sejong Telecom, you can compare the effects of market volatilities on INtRON Biotechnology and Sejong Telecom 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 INtRON Biotechnology with a short position of Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of INtRON Biotechnology and Sejong Telecom.

Diversification Opportunities for INtRON Biotechnology and Sejong Telecom

0.82

Correlation Coefficient

INtRON Biotechnology  Sejong Telecom

Very poor diversification

The 3 months correlation between INtRON and Sejong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iNtRON Biotechnology and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom and INtRON Biotechnology 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 iNtRON Biotechnology are associated (or correlated) with Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of INtRON Biotechnology i.e., INtRON Biotechnology and Sejong Telecom go up and down completely randomly.

Pair Corralation between INtRON Biotechnology and Sejong Telecom

Assuming the 90 days trading horizon iNtRON Biotechnology is expected to under-perform the Sejong Telecom. But the stock apears to be less risky and, when comparing its historical volatility, iNtRON Biotechnology is 1.34 times less risky than Sejong Telecom. The stock trades about -0.07 of its potential returns per unit of risk. The Sejong Telecom is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  67,694  in Sejong Telecom on September 12, 2024 and sell it today you would lose (26,794) from holding Sejong Telecom or give up 39.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

iNtRON Biotechnology  vs.  Sejong Telecom

iNtRON Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iNtRON Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sejong Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sejong Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with INtRON Biotechnology and Sejong Telecom

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

The idea behind iNtRON Biotechnology and Sejong Telecom 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.