Correlation Between Korea Alcohol and Echomarketing CoLtd
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Echomarketing CoLtd 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 Echomarketing CoLtd 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 Echomarketing CoLtd, you can compare the effects of market volatilities on Korea Alcohol and Echomarketing CoLtd 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 Echomarketing CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Echomarketing CoLtd.
Diversification Opportunities for Korea Alcohol and Echomarketing CoLtd
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Echomarketing is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Echomarketing CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echomarketing CoLtd 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 Echomarketing CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echomarketing CoLtd has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Echomarketing CoLtd go up and down completely randomly.
Pair Corralation between Korea Alcohol and Echomarketing CoLtd
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.31 times more return on investment than Echomarketing CoLtd. However, Korea Alcohol Industrial is 3.27 times less risky than Echomarketing CoLtd. It trades about -0.17 of its potential returns per unit of risk. Echomarketing CoLtd is currently generating about -0.08 per unit of risk. If you would invest 906,000 in Korea Alcohol Industrial on September 1, 2024 and sell it today you would lose (47,000) from holding Korea Alcohol Industrial or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Alcohol Industrial vs. Echomarketing CoLtd
Performance |
| Timeline |
| Korea Alcohol Industrial |
| Echomarketing CoLtd |
Korea Alcohol and Echomarketing CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and Echomarketing CoLtd
The main advantage of trading using opposite Korea Alcohol and Echomarketing CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Echomarketing CoLtd 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 Echomarketing CoLtd will offset losses from the drop in Echomarketing CoLtd's long position.| Korea Alcohol vs. Golden Bridge Investment | Korea Alcohol vs. Daol Investment Securities | Korea Alcohol vs. LG Chemicals | Korea Alcohol vs. Nh Investment And |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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