Correlation Between Korean Reinsurance and Nable Communications
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Nable Communications 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 Nable Communications 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 Nable Communications, you can compare the effects of market volatilities on Korean Reinsurance and Nable Communications 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 Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Nable Communications.
Diversification Opportunities for Korean Reinsurance and Nable Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Korean and Nable is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications 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 Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Nable Communications go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Nable Communications
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.85 times more return on investment than Nable Communications. However, Korean Reinsurance Co is 1.18 times less risky than Nable Communications. It trades about 0.12 of its potential returns per unit of risk. Nable Communications is currently generating about 0.06 per unit of risk. If you would invest 786,666 in Korean Reinsurance Co on September 1, 2024 and sell it today you would earn a total of 24,334 from holding Korean Reinsurance Co or generate 3.09% 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. Nable Communications
Performance |
| Timeline |
| Korean Reinsurance |
| Nable Communications |
Korean Reinsurance and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Nable Communications
The main advantage of trading using opposite Korean Reinsurance and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' long position.| Korean Reinsurance vs. SH Energy Chemical | Korean Reinsurance vs. Namhae Chemical | Korean Reinsurance vs. JC Chemical Co | Korean Reinsurance vs. Sung Bo Chemicals |
| Nable Communications vs. Lotte Non Life Insurance | Nable Communications vs. Korean Reinsurance Co | Nable Communications vs. Korea Information Communications | Nable Communications vs. DB Insurance 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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