Correlation Between Korean Drug and MEDIPOST
Can any of the company-specific risk be diversified away by investing in both Korean Drug and MEDIPOST 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 MEDIPOST 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 MEDIPOST Co, you can compare the effects of market volatilities on Korean Drug and MEDIPOST 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 MEDIPOST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and MEDIPOST.
Diversification Opportunities for Korean Drug and MEDIPOST
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korean and MEDIPOST is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and MEDIPOST Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPOST 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 MEDIPOST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPOST has no effect on the direction of Korean Drug i.e., Korean Drug and MEDIPOST go up and down completely randomly.
Pair Corralation between Korean Drug and MEDIPOST
Assuming the 90 days trading horizon Korean Drug Co is expected to generate 0.36 times more return on investment than MEDIPOST. However, Korean Drug Co is 2.81 times less risky than MEDIPOST. It trades about -0.07 of its potential returns per unit of risk. MEDIPOST Co is currently generating about -0.24 per unit of risk. If you would invest 492,755 in Korean Drug Co on October 17, 2024 and sell it today you would lose (15,255) from holding Korean Drug Co or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. MEDIPOST Co
Performance |
| Timeline |
| Korean Drug |
| MEDIPOST |
Korean Drug and MEDIPOST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and MEDIPOST
The main advantage of trading using opposite Korean Drug and MEDIPOST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, MEDIPOST 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 MEDIPOST will offset losses from the drop in MEDIPOST's long position.| Korean Drug vs. Kolon Life Science | Korean Drug vs. JETEMA Co | Korean Drug vs. Aminologics CoLtd | Korean Drug vs. Daihan Pharmaceutical CoLtd |
| MEDIPOST vs. Korean Drug Co | MEDIPOST vs. Sewoon Medical Co | MEDIPOST vs. Hanmi Semiconductor Co | MEDIPOST vs. Seers Technology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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