Correlation Between Korea Alcohol and Clean Science
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Clean Science 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 Clean Science 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 Clean Science co, you can compare the effects of market volatilities on Korea Alcohol and Clean Science 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 Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Clean Science.
Diversification Opportunities for Korea Alcohol and Clean Science
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Korea and Clean is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co 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 Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Clean Science go up and down completely randomly.
Pair Corralation between Korea Alcohol and Clean Science
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.75 times more return on investment than Clean Science. However, Korea Alcohol Industrial is 1.33 times less risky than Clean Science. It trades about -0.19 of its potential returns per unit of risk. Clean Science co is currently generating about -0.25 per unit of risk. If you would invest 967,000 in Korea Alcohol Industrial on August 28, 2024 and sell it today you would lose (103,000) from holding Korea Alcohol Industrial or give up 10.65% 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. Clean Science co
Performance |
| Timeline |
| Korea Alcohol Industrial |
| Clean Science co |
Korea Alcohol and Clean Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and Clean Science
The main advantage of trading using opposite Korea Alcohol and Clean Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Clean Science 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 Clean Science will offset losses from the drop in Clean Science's long position.| Korea Alcohol vs. LG Chemicals | Korea Alcohol vs. Lotte Chemical Corp | Korea Alcohol vs. Hyundai Steel | Korea Alcohol vs. Seah Steel Corp |
| Clean Science vs. Korea Alcohol Industrial | Clean Science vs. Global Standard Technology | Clean Science vs. Puloon Technology | Clean Science vs. YG Entertainment |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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