Correlation Between Korean Drug and SMCoreInc
Can any of the company-specific risk be diversified away by investing in both Korean Drug and SMCoreInc 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 Drug and SMCoreInc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Drug Co and SMCoreInc, you can compare the effects of market volatilities on Korean Drug and SMCoreInc 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 Drug with a short position of SMCoreInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and SMCoreInc.
Diversification Opportunities for Korean Drug and SMCoreInc
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korean and SMCoreInc is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and SMCoreInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMCoreInc and Korean Drug 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 Drug Co are associated (or correlated) with SMCoreInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMCoreInc has no effect on the direction of Korean Drug i.e., Korean Drug and SMCoreInc go up and down completely randomly.
Pair Corralation between Korean Drug and SMCoreInc
Assuming the 90 days trading horizon Korean Drug Co is expected to under-perform the SMCoreInc. But the stock apears to be less risky and, when comparing its historical volatility, Korean Drug Co is 1.22 times less risky than SMCoreInc. The stock trades about -0.04 of its potential returns per unit of risk. The SMCoreInc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 589,290 in SMCoreInc on August 26, 2024 and sell it today you would lose (159,790) from holding SMCoreInc or give up 27.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. SMCoreInc
Performance |
| Timeline |
| Korean Drug |
| SMCoreInc |
Korean Drug and SMCoreInc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and SMCoreInc
The main advantage of trading using opposite Korean Drug and SMCoreInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, SMCoreInc 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 SMCoreInc will offset losses from the drop in SMCoreInc's long position.| Korean Drug vs. Kolon Life Science | Korean Drug vs. Aminologics CoLtd | Korean Drug vs. Daihan Pharmaceutical CoLtd | Korean Drug vs. Withuspharmaceutical CoLtd |
| SMCoreInc vs. Hyundai Green Food | SMCoreInc vs. Shinsung Delta Tech | SMCoreInc vs. Korean Drug Co | SMCoreInc vs. QUALITAS SEMICONDUCTOR LTD |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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