Correlation Between Korea Alcohol and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol 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 Korea Alcohol and KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on Korea Alcohol 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 Korea Alcohol with a short position of KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and KakaoBank Corp.
Diversification Opportunities for Korea Alcohol and KakaoBank Corp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and KakaoBank is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 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 Korea Alcohol i.e., Korea Alcohol and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Korea Alcohol and KakaoBank Corp
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.48 times more return on investment than KakaoBank Corp. However, Korea Alcohol Industrial is 2.1 times less risky than KakaoBank Corp. It trades about 0.66 of its potential returns per unit of risk. KakaoBank Corp is currently generating about -0.26 per unit of risk. If you would invest 759,269 in Korea Alcohol Industrial on October 12, 2024 and sell it today you would earn a total of 100,731 from holding Korea Alcohol Industrial or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Alcohol Industrial vs. KakaoBank Corp
Performance |
| Timeline |
| Korea Alcohol Industrial |
| KakaoBank Corp |
Korea Alcohol and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and KakaoBank Corp
The main advantage of trading using opposite Korea Alcohol and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol 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.| Korea Alcohol vs. Samji Electronics Co | Korea Alcohol vs. GS Engineering Construction | Korea Alcohol vs. Hansol Homedeco Co | Korea Alcohol vs. Polaris Office Corp |
| KakaoBank Corp vs. Korea Alcohol Industrial | KakaoBank Corp vs. Sajo Seafood | KakaoBank Corp vs. Samji Electronics Co | KakaoBank Corp vs. Samwha Electronics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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