Correlation Between Korean Reinsurance and ChipsMedia
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and ChipsMedia 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 Korean Reinsurance and ChipsMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and ChipsMedia, you can compare the effects of market volatilities on Korean Reinsurance and ChipsMedia 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 Korean Reinsurance with a short position of ChipsMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and ChipsMedia.
Diversification Opportunities for Korean Reinsurance and ChipsMedia
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korean and ChipsMedia is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and ChipsMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipsMedia and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with ChipsMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipsMedia has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and ChipsMedia go up and down completely randomly.
Pair Corralation between Korean Reinsurance and ChipsMedia
Assuming the 90 days trading horizon Korean Reinsurance is expected to generate 11.21 times less return on investment than ChipsMedia. But when comparing it to its historical volatility, Korean Reinsurance Co is 3.07 times less risky than ChipsMedia. It trades about 0.06 of its potential returns per unit of risk. ChipsMedia is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,380,000 in ChipsMedia on October 16, 2024 and sell it today you would earn a total of 235,000 from holding ChipsMedia or generate 17.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. ChipsMedia
Performance |
| Timeline |
| Korean Reinsurance |
| ChipsMedia |
Korean Reinsurance and ChipsMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and ChipsMedia
The main advantage of trading using opposite Korean Reinsurance and ChipsMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, ChipsMedia 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 ChipsMedia will offset losses from the drop in ChipsMedia's long position.| Korean Reinsurance vs. Youngbo Chemical Co | Korean Reinsurance vs. Hanwha Chemical Corp | Korean Reinsurance vs. Dongnam Chemical Co | Korean Reinsurance vs. ENERGYMACHINERY KOREA CoLtd |
| ChipsMedia vs. INFINITT Healthcare Co | ChipsMedia vs. Hana Materials | ChipsMedia vs. Kolon Plastics | ChipsMedia vs. Korean Reinsurance Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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