Correlation Between Korean Reinsurance and ABOV Semiconductor
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and ABOV Semiconductor 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 ABOV Semiconductor 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 ABOV Semiconductor Co, you can compare the effects of market volatilities on Korean Reinsurance and ABOV Semiconductor 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 ABOV Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and ABOV Semiconductor.
Diversification Opportunities for Korean Reinsurance and ABOV Semiconductor
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and ABOV is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor 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 ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and ABOV Semiconductor go up and down completely randomly.
Pair Corralation between Korean Reinsurance and ABOV Semiconductor
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.6 times more return on investment than ABOV Semiconductor. However, Korean Reinsurance Co is 1.66 times less risky than ABOV Semiconductor. It trades about 0.25 of its potential returns per unit of risk. ABOV Semiconductor Co is currently generating about -0.4 per unit of risk. If you would invest 782,500 in Korean Reinsurance Co on September 5, 2024 and sell it today you would earn a total of 67,500 from holding Korean Reinsurance Co or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. ABOV Semiconductor Co
Performance |
| Timeline |
| Korean Reinsurance |
| ABOV Semiconductor |
Korean Reinsurance and ABOV Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and ABOV Semiconductor
The main advantage of trading using opposite Korean Reinsurance and ABOV Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, ABOV Semiconductor 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 ABOV Semiconductor will offset losses from the drop in ABOV Semiconductor's long position.| Korean Reinsurance vs. Ssangyong Information Communication | Korean Reinsurance vs. LG Household Healthcare | Korean Reinsurance vs. DataSolution | Korean Reinsurance vs. Daishin Information Communications |
| ABOV Semiconductor vs. Dongsin Engineering Construction | ABOV Semiconductor vs. Doosan Fuel Cell | ABOV Semiconductor vs. Daishin Balance 1 | ABOV Semiconductor vs. Total Soft Bank |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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