Correlation Between Korean Drug and Cuckoo Homesys
Can any of the company-specific risk be diversified away by investing in both Korean Drug and Cuckoo Homesys 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 Cuckoo Homesys 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 Cuckoo Homesys Co, you can compare the effects of market volatilities on Korean Drug and Cuckoo Homesys 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 Cuckoo Homesys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and Cuckoo Homesys.
Diversification Opportunities for Korean Drug and Cuckoo Homesys
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korean and Cuckoo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and Cuckoo Homesys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Homesys 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 Cuckoo Homesys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Homesys has no effect on the direction of Korean Drug i.e., Korean Drug and Cuckoo Homesys go up and down completely randomly.
Pair Corralation between Korean Drug and Cuckoo Homesys
Assuming the 90 days trading horizon Korean Drug Co is expected to under-perform the Cuckoo Homesys. In addition to that, Korean Drug is 1.27 times more volatile than Cuckoo Homesys Co. It trades about -0.08 of its total potential returns per unit of risk. Cuckoo Homesys Co is currently generating about -0.04 per unit of volatility. If you would invest 2,340,000 in Cuckoo Homesys Co on September 3, 2024 and sell it today you would lose (265,000) from holding Cuckoo Homesys Co or give up 11.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. Cuckoo Homesys Co
Performance |
| Timeline |
| Korean Drug |
| Cuckoo Homesys |
Korean Drug and Cuckoo Homesys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and Cuckoo Homesys
The main advantage of trading using opposite Korean Drug and Cuckoo Homesys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, Cuckoo Homesys 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 Cuckoo Homesys will offset losses from the drop in Cuckoo Homesys' long position.| Korean Drug vs. Kolon Life Science | Korean Drug vs. JETEMA Co | Korean Drug vs. Aminologics CoLtd | Korean Drug vs. Daihan Pharmaceutical CoLtd |
| Cuckoo Homesys vs. Korean Air Lines | Cuckoo Homesys vs. CU Medical Systems | Cuckoo Homesys vs. Home Center Holdings | Cuckoo Homesys vs. Korean Drug 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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