Correlation Between Korean Reinsurance and Solux
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Solux 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 Solux 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 Solux Co, you can compare the effects of market volatilities on Korean Reinsurance and Solux 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 Solux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Solux.
Diversification Opportunities for Korean Reinsurance and Solux
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and Solux is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Solux Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solux 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 Solux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solux has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Solux go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Solux
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to under-perform the Solux. But the stock apears to be less risky and, when comparing its historical volatility, Korean Reinsurance Co is 2.22 times less risky than Solux. The stock trades about -0.07 of its potential returns per unit of risk. The Solux Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 819,000 in Solux Co on September 19, 2024 and sell it today you would earn a total of 44,000 from holding Solux Co or generate 5.37% 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. Solux Co
Performance |
Timeline |
Korean Reinsurance |
Solux |
Korean Reinsurance and Solux Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korean Reinsurance and Solux
The main advantage of trading using opposite Korean Reinsurance and Solux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Solux 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 Solux will offset losses from the drop in Solux's long position.Korean Reinsurance vs. Samsung Electronics Co | Korean Reinsurance vs. Samsung Electronics Co | Korean Reinsurance vs. SK Hynix | Korean Reinsurance vs. POSCO Holdings |
Solux vs. Sangsangin Investment Securities | Solux vs. Hanshin Construction Co | Solux vs. Korean Reinsurance Co | Solux vs. EBEST Investment Securities |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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