Correlation Between Korea Shipbuilding and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Korea Shipbuilding and Korean Reinsurance 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 Shipbuilding and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Shipbuilding Offshore and Korean Reinsurance Co, you can compare the effects of market volatilities on Korea Shipbuilding and Korean Reinsurance 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 Shipbuilding with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Shipbuilding and Korean Reinsurance.
Diversification Opportunities for Korea Shipbuilding and Korean Reinsurance
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Korean is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Korea Shipbuilding Offshore and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Korea Shipbuilding 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 Shipbuilding Offshore are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Korea Shipbuilding i.e., Korea Shipbuilding and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Korea Shipbuilding and Korean Reinsurance
Assuming the 90 days trading horizon Korea Shipbuilding Offshore is expected to generate 1.16 times more return on investment than Korean Reinsurance. However, Korea Shipbuilding is 1.16 times more volatile than Korean Reinsurance Co. It trades about 0.17 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.04 per unit of risk. If you would invest 23,000,000 in Korea Shipbuilding Offshore on October 22, 2024 and sell it today you would earn a total of 1,400,000 from holding Korea Shipbuilding Offshore or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Shipbuilding Offshore vs. Korean Reinsurance Co
Performance |
| Timeline |
| Korea Shipbuilding |
| Korean Reinsurance |
Korea Shipbuilding and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Shipbuilding and Korean Reinsurance
The main advantage of trading using opposite Korea Shipbuilding and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Shipbuilding position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Korea Shipbuilding vs. Sangsin Energy Display | Korea Shipbuilding vs. EBEST Investment Securities | Korea Shipbuilding vs. Stic Investments | Korea Shipbuilding vs. NH Investment Securities |
| Korean Reinsurance vs. Jin Air Co | Korean Reinsurance vs. KTB Investment Securities | Korean Reinsurance vs. Nh Investment And | Korean Reinsurance vs. Daol 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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