Correlation Between Moonbae Steel and Korea Information
Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and Korea Information 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 Moonbae Steel and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moonbae Steel and Korea Information Communications, you can compare the effects of market volatilities on Moonbae Steel and Korea Information 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 Moonbae Steel with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Korea Information.
Diversification Opportunities for Moonbae Steel and Korea Information
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Moonbae and Korea is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Moonbae 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 Moonbae Steel are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Korea Information go up and down completely randomly.
Pair Corralation between Moonbae Steel and Korea Information
Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.02 times more return on investment than Korea Information. However, Moonbae Steel is 1.02 times more volatile than Korea Information Communications. It trades about -0.05 of its potential returns per unit of risk. Korea Information Communications is currently generating about -0.06 per unit of risk. If you would invest 367,495 in Moonbae Steel on November 9, 2024 and sell it today you would lose (142,995) from holding Moonbae Steel or give up 38.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moonbae Steel vs. Korea Information Communicatio
Performance |
| Timeline |
| Moonbae Steel |
| Korea Information |
Moonbae Steel and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moonbae Steel and Korea Information
The main advantage of trading using opposite Moonbae Steel and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Moonbae Steel vs. INNOX Advanced Materials | Moonbae Steel vs. RF Materials Co | Moonbae Steel vs. Hyundai Engineering Plastics | Moonbae Steel vs. Samsung Publishing Co |
| Korea Information vs. Tway Air Co | Korea Information vs. Sk Biopharmaceuticals Co | Korea Information vs. Jeju Air Co | Korea Information vs. CJ Seafood Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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