Correlation Between SBI Investment and DIGITAL CHOSUN
Can any of the company-specific risk be diversified away by investing in both SBI Investment and DIGITAL CHOSUN 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 DIGITAL CHOSUN 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 DIGITAL CHOSUN, you can compare the effects of market volatilities on SBI Investment and DIGITAL CHOSUN 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 DIGITAL CHOSUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and DIGITAL CHOSUN.
Diversification Opportunities for SBI Investment and DIGITAL CHOSUN
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBI and DIGITAL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and DIGITAL CHOSUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL CHOSUN 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 DIGITAL CHOSUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL CHOSUN has no effect on the direction of SBI Investment i.e., SBI Investment and DIGITAL CHOSUN go up and down completely randomly.
Pair Corralation between SBI Investment and DIGITAL CHOSUN
Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 1.09 times more return on investment than DIGITAL CHOSUN. However, SBI Investment is 1.09 times more volatile than DIGITAL CHOSUN. It trades about 0.0 of its potential returns per unit of risk. DIGITAL CHOSUN is currently generating about -0.01 per unit of risk. If you would invest 80,800 in SBI Investment KOREA on November 7, 2024 and sell it today you would lose (9,300) from holding SBI Investment KOREA or give up 11.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.49% |
| Values | Daily Returns |
SBI Investment KOREA vs. DIGITAL CHOSUN
Performance |
| Timeline |
| SBI Investment KOREA |
| DIGITAL CHOSUN |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SBI Investment and DIGITAL CHOSUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and DIGITAL CHOSUN
The main advantage of trading using opposite SBI Investment and DIGITAL CHOSUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, DIGITAL CHOSUN 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 DIGITAL CHOSUN will offset losses from the drop in DIGITAL CHOSUN's long position.| SBI Investment vs. KTB Investment Securities | SBI Investment vs. SV Investment | SBI Investment vs. Korean Air Lines | SBI Investment vs. EBEST Investment Securities |
| DIGITAL CHOSUN vs. Sempio Foods Co | DIGITAL CHOSUN vs. Daishin Information Communications | DIGITAL CHOSUN vs. CKH Food Health | DIGITAL CHOSUN vs. Samlip General Foods |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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