Correlation Between SBI Investment and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both SBI Investment and Kwang Jin 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 SBI Investment and Kwang Jin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and Kwang Jin Ind, you can compare the effects of market volatilities on SBI Investment and Kwang Jin 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 SBI Investment with a short position of Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Kwang Jin.
Diversification Opportunities for SBI Investment and Kwang Jin
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBI and Kwang is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of SBI Investment i.e., SBI Investment and Kwang Jin go up and down completely randomly.
Pair Corralation between SBI Investment and Kwang Jin
Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 3.3 times more return on investment than Kwang Jin. However, SBI Investment is 3.3 times more volatile than Kwang Jin Ind. It trades about 0.12 of its potential returns per unit of risk. Kwang Jin Ind is currently generating about 0.08 per unit of risk. If you would invest 71,700 in SBI Investment KOREA on September 19, 2024 and sell it today you would earn a total of 8,500 from holding SBI Investment KOREA or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. Kwang Jin Ind
Performance |
| Timeline |
| SBI Investment KOREA |
| Kwang Jin Ind |
SBI Investment and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and Kwang Jin
The main advantage of trading using opposite SBI Investment and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.| SBI Investment vs. KB Financial Group | SBI Investment vs. Shinhan Financial Group | SBI Investment vs. Hana Financial | SBI Investment vs. Woori Financial Group |
| Kwang Jin vs. Golden Bridge Investment | Kwang Jin vs. Daewon Media Co | Kwang Jin vs. SBI Investment KOREA | Kwang Jin vs. Sangsangin Investment Securities |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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