Correlation Between Korean Reinsurance and High Tech
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and High Tech 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 High Tech 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 High Tech Pharm, you can compare the effects of market volatilities on Korean Reinsurance and High Tech 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 High Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and High Tech.
Diversification Opportunities for Korean Reinsurance and High Tech
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korean and High is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and High Tech Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tech Pharm 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 High Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tech Pharm has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and High Tech go up and down completely randomly.
Pair Corralation between Korean Reinsurance and High Tech
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.61 times more return on investment than High Tech. However, Korean Reinsurance Co is 1.64 times less risky than High Tech. It trades about 0.09 of its potential returns per unit of risk. High Tech Pharm is currently generating about 0.05 per unit of risk. If you would invest 494,863 in Korean Reinsurance Co on August 29, 2024 and sell it today you would earn a total of 295,137 from holding Korean Reinsurance Co or generate 59.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. High Tech Pharm
Performance |
| Timeline |
| Korean Reinsurance |
| High Tech Pharm |
Korean Reinsurance and High Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and High Tech
The main advantage of trading using opposite Korean Reinsurance and High Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, High Tech 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 High Tech will offset losses from the drop in High Tech's long position.| Korean Reinsurance vs. AptaBio Therapeutics | Korean Reinsurance vs. Daewoo SBI SPAC | Korean Reinsurance vs. Dream Security co | Korean Reinsurance vs. Microfriend |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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