Correlation Between Korean Reinsurance and Echomarketing CoLtd
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Echomarketing CoLtd 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 Echomarketing CoLtd 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 Echomarketing CoLtd, you can compare the effects of market volatilities on Korean Reinsurance and Echomarketing CoLtd 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 Echomarketing CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Echomarketing CoLtd.
Diversification Opportunities for Korean Reinsurance and Echomarketing CoLtd
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korean and Echomarketing is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Echomarketing CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echomarketing CoLtd 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 Echomarketing CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echomarketing CoLtd has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Echomarketing CoLtd go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Echomarketing CoLtd
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.53 times more return on investment than Echomarketing CoLtd. However, Korean Reinsurance Co is 1.87 times less risky than Echomarketing CoLtd. It trades about 0.08 of its potential returns per unit of risk. Echomarketing CoLtd is currently generating about -0.01 per unit of risk. If you would invest 725,833 in Korean Reinsurance Co on November 2, 2024 and sell it today you would earn a total of 88,167 from holding Korean Reinsurance Co or generate 12.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. Echomarketing CoLtd
Performance |
| Timeline |
| Korean Reinsurance |
| Echomarketing CoLtd |
Korean Reinsurance and Echomarketing CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Echomarketing CoLtd
The main advantage of trading using opposite Korean Reinsurance and Echomarketing CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Echomarketing CoLtd 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 Echomarketing CoLtd will offset losses from the drop in Echomarketing CoLtd's long position.| Korean Reinsurance vs. Sewoon Medical Co | Korean Reinsurance vs. Hyundai Home Shopping | Korean Reinsurance vs. Kukil Metal Co | Korean Reinsurance vs. iNtRON Biotechnology |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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