Correlation Between Korean Reinsurance and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech Co, you can compare the effects of market volatilities on Korean Reinsurance and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Lion Chemtech.
Diversification Opportunities for Korean Reinsurance and Lion Chemtech
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Korean and Lion is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Lion Chemtech go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Lion Chemtech
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.65 times more return on investment than Lion Chemtech. However, Korean Reinsurance Co is 1.53 times less risky than Lion Chemtech. It trades about 0.12 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.09 per unit of risk. If you would invest 439,012 in Korean Reinsurance Co on August 28, 2024 and sell it today you would earn a total of 352,988 from holding Korean Reinsurance Co or generate 80.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. Lion Chemtech Co
Performance |
| Timeline |
| Korean Reinsurance |
| Lion Chemtech |
Korean Reinsurance and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Lion Chemtech
The main advantage of trading using opposite Korean Reinsurance and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Korean Reinsurance vs. AptaBio Therapeutics | Korean Reinsurance vs. Daewoo SBI SPAC | Korean Reinsurance vs. Dream Security co | Korean Reinsurance vs. Microfriend |
| Lion Chemtech vs. Moonbae Steel | Lion Chemtech vs. Fine Besteel Co | Lion Chemtech vs. J Steel Co | Lion Chemtech vs. DONGKUK STEEL MILL |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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