Correlation Between Oriental Precision and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Oriental Precision and KakaoBank Corp 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 Oriental Precision and KakaoBank Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Precision Engineering and KakaoBank Corp, you can compare the effects of market volatilities on Oriental Precision and KakaoBank Corp 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 Oriental Precision with a short position of KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Precision and KakaoBank Corp.
Diversification Opportunities for Oriental Precision and KakaoBank Corp
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Oriental and KakaoBank is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Precision Engineering and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp and Oriental Precision 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 Oriental Precision Engineering are associated (or correlated) with KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Oriental Precision i.e., Oriental Precision and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Oriental Precision and KakaoBank Corp
Assuming the 90 days trading horizon Oriental Precision Engineering is expected to under-perform the KakaoBank Corp. In addition to that, Oriental Precision is 1.26 times more volatile than KakaoBank Corp. It trades about -0.01 of its total potential returns per unit of risk. KakaoBank Corp is currently generating about 0.04 per unit of volatility. If you would invest 2,170,000 in KakaoBank Corp on September 24, 2024 and sell it today you would earn a total of 40,000 from holding KakaoBank Corp or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oriental Precision Engineering vs. KakaoBank Corp
Performance |
| Timeline |
| Oriental Precision |
| KakaoBank Corp |
Oriental Precision and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Precision and KakaoBank Corp
The main advantage of trading using opposite Oriental Precision and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Precision position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| Oriental Precision vs. KakaoBank Corp | Oriental Precision vs. NICE Information Service | Oriental Precision vs. Korea Information Engineering | Oriental Precision vs. Lotte Data Communication |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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