Correlation Between Korea Steel and Kisan Telecom
Can any of the company-specific risk be diversified away by investing in both Korea Steel and Kisan Telecom 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 Korea Steel and Kisan Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Steel Co and Kisan Telecom Co, you can compare the effects of market volatilities on Korea Steel and Kisan Telecom 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 Korea Steel with a short position of Kisan Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and Kisan Telecom.
Diversification Opportunities for Korea Steel and Kisan Telecom
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Kisan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and Kisan Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kisan Telecom and Korea Steel 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 Korea Steel Co are associated (or correlated) with Kisan Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kisan Telecom has no effect on the direction of Korea Steel i.e., Korea Steel and Kisan Telecom go up and down completely randomly.
Pair Corralation between Korea Steel and Kisan Telecom
Assuming the 90 days trading horizon Korea Steel Co is expected to under-perform the Kisan Telecom. In addition to that, Korea Steel is 1.81 times more volatile than Kisan Telecom Co. It trades about -0.2 of its total potential returns per unit of risk. Kisan Telecom Co is currently generating about -0.12 per unit of volatility. If you would invest 177,900 in Kisan Telecom Co on August 28, 2024 and sell it today you would lose (4,400) from holding Kisan Telecom Co or give up 2.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. Kisan Telecom Co
Performance |
| Timeline |
| Korea Steel |
| Kisan Telecom |
Korea Steel and Kisan Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and Kisan Telecom
The main advantage of trading using opposite Korea Steel and Kisan Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, Kisan Telecom 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 Kisan Telecom will offset losses from the drop in Kisan Telecom's long position.The idea behind Korea Steel Co and Kisan Telecom Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kisan Telecom vs. Digital Multimedia Technology | Kisan Telecom vs. Kaonmedia Co | Kisan Telecom vs. FNC Entertainment Co | Kisan Telecom vs. Innowireless 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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