Correlation Between Seojin Automotive and Viatron Technologies

Can any of the company-specific risk be diversified away by investing in both Seojin Automotive and Viatron Technologies 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 Viatron Technologies 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 Viatron Technologies, you can compare the effects of market volatilities on Seojin Automotive and Viatron Technologies 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 Viatron Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seojin Automotive and Viatron Technologies.

Diversification Opportunities for Seojin Automotive and Viatron Technologies

-0.39

Correlation Coefficient

Seojin Automotive  Viatron Technologies

Very good diversification

The 3 months correlation between Seojin and Viatron is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Seojin Automotive CoLtd and Viatron Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viatron Technologies 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 Viatron Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viatron Technologies has no effect on the direction of Seojin Automotive i.e., Seojin Automotive and Viatron Technologies go up and down completely randomly.

Pair Corralation between Seojin Automotive and Viatron Technologies

Assuming the 90 days trading horizon Seojin Automotive CoLtd is expected to generate 1.61 times more return on investment than Viatron Technologies. However, Seojin Automotive is 1.61 times more volatile than Viatron Technologies. It trades about 0.12 of its potential returns per unit of risk. Viatron Technologies is currently generating about 0.17 per unit of risk. If you would invest  315,000  in Seojin Automotive CoLtd on February 7, 2024 and sell it today you would earn a total of  16,000  from holding Seojin Automotive CoLtd or generate 5.08% return on investment over 90 days.

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

Seojin Automotive CoLtd  vs.  Viatron Technologies

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 somewhat strong basic indicators, Seojin Automotive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Viatron Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viatron Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Viatron Technologies may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Seojin Automotive and Viatron Technologies

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

The idea behind Seojin Automotive CoLtd and Viatron Technologies 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.