Correlation Between Seojin Automotive and Nepes

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

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

Diversification Opportunities for Seojin Automotive and Nepes

0.94

Correlation Coefficient

Seojin Automotive  Nepes

Almost no diversification

The 3 months correlation between Seojin and Nepes is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Seojin Automotive CoLtd and Nepes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepes and Seojin Automotive 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 Seojin Automotive CoLtd 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 Seojin Automotive i.e., Seojin Automotive and Nepes go up and down completely randomly.

Pair Corralation between Seojin Automotive and Nepes

Assuming the 90 days trading horizon Seojin Automotive CoLtd is expected to under-perform the Nepes. But the stock apears to be less risky and, when comparing its historical volatility, Seojin Automotive CoLtd is 1.41 times less risky than Nepes. The stock trades about -0.25 of its potential returns per unit of risk. The Nepes is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  840,000  in Nepes on September 12, 2024 and sell it today you would lose (227,000) from holding Nepes or give up 27.02% of portfolio value over 90 days.

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

Seojin Automotive CoLtd  vs.  Nepes

Seojin Automotive CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seojin Automotive CoLtd 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.

Nepes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nepes 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 Seojin Automotive and Nepes

The main advantage of trading using opposite Seojin Automotive and Nepes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seojin Automotive 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.

The idea behind Seojin Automotive CoLtd and Nepes 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.