Correlation Between Korea Alcohol and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Korean Drug 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 Korea Alcohol and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Alcohol Industrial and Korean Drug Co, you can compare the effects of market volatilities on Korea Alcohol and Korean Drug 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 Korea Alcohol with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Korean Drug.
Diversification Opportunities for Korea Alcohol and Korean Drug
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Korea and Korean is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and Korea Alcohol 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 Korea Alcohol Industrial are associated (or correlated) with Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Korean Drug go up and down completely randomly.
Pair Corralation between Korea Alcohol and Korean Drug
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 1.06 times more return on investment than Korean Drug. However, Korea Alcohol is 1.06 times more volatile than Korean Drug Co. It trades about -0.13 of its potential returns per unit of risk. Korean Drug Co is currently generating about -0.22 per unit of risk. If you would invest 900,000 in Korea Alcohol Industrial on August 29, 2024 and sell it today you would lose (36,000) from holding Korea Alcohol Industrial or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Alcohol Industrial vs. Korean Drug Co
Performance |
| Timeline |
| Korea Alcohol Industrial |
| Korean Drug |
Korea Alcohol and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and Korean Drug
The main advantage of trading using opposite Korea Alcohol and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Korea Alcohol vs. Sungchang Autotech Co | Korea Alcohol vs. RFTech Co | Korea Alcohol vs. INFINITT Healthcare Co | Korea Alcohol vs. POSCO M TECH Co |
| Korean Drug vs. Aminologics CoLtd | Korean Drug vs. Withuspharmaceutical CoLtd | Korean Drug vs. High Tech Pharm |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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