Correlation Between Korean Drug and GiantStep
Can any of the company-specific risk be diversified away by investing in both Korean Drug and GiantStep 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 GiantStep 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 GiantStep Co, you can compare the effects of market volatilities on Korean Drug and GiantStep 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 GiantStep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and GiantStep.
Diversification Opportunities for Korean Drug and GiantStep
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korean and GiantStep is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and GiantStep Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GiantStep 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 GiantStep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GiantStep has no effect on the direction of Korean Drug i.e., Korean Drug and GiantStep go up and down completely randomly.
Pair Corralation between Korean Drug and GiantStep
Assuming the 90 days trading horizon Korean Drug Co is expected to generate 0.43 times more return on investment than GiantStep. However, Korean Drug Co is 2.32 times less risky than GiantStep. It trades about 0.15 of its potential returns per unit of risk. GiantStep Co is currently generating about 0.03 per unit of risk. If you would invest 461,777 in Korean Drug Co on October 24, 2024 and sell it today you would earn a total of 22,223 from holding Korean Drug Co or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. GiantStep Co
Performance |
| Timeline |
| Korean Drug |
| GiantStep |
Korean Drug and GiantStep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and GiantStep
The main advantage of trading using opposite Korean Drug and GiantStep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, GiantStep 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 GiantStep will offset losses from the drop in GiantStep's long position.| Korean Drug vs. Kolon Life Science | Korean Drug vs. JETEMA Co | Korean Drug vs. AnterogenCoLtd | Korean Drug vs. Busan Industrial Co |
| GiantStep vs. Daejung Chemicals Metals | GiantStep vs. SK Chemicals Co | GiantStep vs. Pureun Mutual Savings | GiantStep vs. Hannong Chemicals |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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