Correlation Between Automobile and Korea Investment
Can any of the company-specific risk be diversified away by investing in both Automobile and Korea Investment 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 Automobile and Korea Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Korea Investment Holdings, you can compare the effects of market volatilities on Automobile and Korea Investment 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 Automobile with a short position of Korea Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Korea Investment.
Diversification Opportunities for Automobile and Korea Investment
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Automobile and Korea is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings and Automobile 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 Automobile Pc are associated (or correlated) with Korea Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of Automobile i.e., Automobile and Korea Investment go up and down completely randomly.
Pair Corralation between Automobile and Korea Investment
Assuming the 90 days trading horizon Automobile is expected to generate 9.19 times less return on investment than Korea Investment. In addition to that, Automobile is 5.07 times more volatile than Korea Investment Holdings. It trades about 0.0 of its total potential returns per unit of risk. Korea Investment Holdings is currently generating about 0.14 per unit of volatility. If you would invest 5,270,000 in Korea Investment Holdings on September 1, 2024 and sell it today you would earn a total of 140,000 from holding Korea Investment Holdings or generate 2.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Korea Investment Holdings
Performance |
| Timeline |
| Automobile Pc |
| Korea Investment Holdings |
Automobile and Korea Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Korea Investment
The main advantage of trading using opposite Automobile and Korea Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Korea Investment 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 Korea Investment will offset losses from the drop in Korea Investment's long position.| Automobile vs. Miwon Chemical | Automobile vs. Sung Bo Chemicals | Automobile vs. Chin Yang Chemical | Automobile vs. Daehan Synthetic Fiber |
| Korea Investment vs. GS Retail Co | Korea Investment vs. Handok Clean Tech | Korea Investment vs. Samsung Life Insurance | Korea Investment vs. Clean Science 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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