Correlation Between Choil Aluminum and Korea Information
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Korea Information 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 Choil Aluminum and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Korea Information Communications, you can compare the effects of market volatilities on Choil Aluminum and Korea Information 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 Choil Aluminum with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Korea Information.
Diversification Opportunities for Choil Aluminum and Korea Information
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Choil and Korea is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Korea Information go up and down completely randomly.
Pair Corralation between Choil Aluminum and Korea Information
Assuming the 90 days trading horizon Choil Aluminum is expected to generate 2.17 times more return on investment than Korea Information. However, Choil Aluminum is 2.17 times more volatile than Korea Information Communications. It trades about -0.04 of its potential returns per unit of risk. Korea Information Communications is currently generating about -0.1 per unit of risk. If you would invest 151,300 in Choil Aluminum on September 20, 2024 and sell it today you would lose (6,100) from holding Choil Aluminum or give up 4.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Korea Information Communicatio
Performance |
| Timeline |
| Choil Aluminum |
| Korea Information |
Choil Aluminum and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Korea Information
The main advantage of trading using opposite Choil Aluminum and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information's long position.| Choil Aluminum vs. Solution Advanced Technology | Choil Aluminum vs. Busan Industrial Co | Choil Aluminum vs. Busan Ind | Choil Aluminum vs. Sam Chun Dang |
| Korea Information vs. Dongwoo Farm To | Korea Information vs. GS Engineering Construction | Korea Information vs. Shinsegae Food | Korea Information vs. FOODWELL 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 Stocks Directory module to find actively traded stocks across global markets.
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