Correlation Between Korea Zinc and Solus Advanced
Can any of the company-specific risk be diversified away by investing in both Korea Zinc and Solus Advanced 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 Zinc and Solus Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Zinc and Solus Advanced Materials, you can compare the effects of market volatilities on Korea Zinc and Solus Advanced 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 Zinc with a short position of Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Zinc and Solus Advanced.
Diversification Opportunities for Korea Zinc and Solus Advanced
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Solus is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials and Korea Zinc 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 Zinc are associated (or correlated) with Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of Korea Zinc i.e., Korea Zinc and Solus Advanced go up and down completely randomly.
Pair Corralation between Korea Zinc and Solus Advanced
Assuming the 90 days trading horizon Korea Zinc is expected to generate 0.96 times more return on investment than Solus Advanced. However, Korea Zinc is 1.04 times less risky than Solus Advanced. It trades about 0.01 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about -0.66 per unit of risk. If you would invest 100,000,000 in Korea Zinc on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Korea Zinc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Zinc vs. Solus Advanced Materials
Performance |
| Timeline |
| Korea Zinc |
| Solus Advanced Materials |
Korea Zinc and Solus Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Zinc and Solus Advanced
The main advantage of trading using opposite Korea Zinc and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Zinc position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.| Korea Zinc vs. Dongbu Steel Co | Korea Zinc vs. Heungkuk Metaltech CoLtd | Korea Zinc vs. Fine Besteel Co | Korea Zinc vs. Dong A Steel Technology |
| Solus Advanced vs. Iljin Display | Solus Advanced vs. Sungmoon Electronics Co | Solus Advanced vs. Busan Industrial Co | Solus Advanced vs. UNISEM 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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