Correlation Between Leaders Technology and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Leaders Technology and Korea Steel 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 Leaders Technology and Korea Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leaders Technology Investment and Korea Steel Co, you can compare the effects of market volatilities on Leaders Technology and Korea Steel 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 Leaders Technology with a short position of Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leaders Technology and Korea Steel.
Diversification Opportunities for Leaders Technology and Korea Steel
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leaders and Korea is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Leaders Technology Investment and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Steel and Leaders Technology 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 Leaders Technology Investment are associated (or correlated) with Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Leaders Technology i.e., Leaders Technology and Korea Steel go up and down completely randomly.
Pair Corralation between Leaders Technology and Korea Steel
Assuming the 90 days trading horizon Leaders Technology Investment is expected to generate 2.95 times more return on investment than Korea Steel. However, Leaders Technology is 2.95 times more volatile than Korea Steel Co. It trades about 0.01 of its potential returns per unit of risk. Korea Steel Co is currently generating about 0.02 per unit of risk. If you would invest 27,000 in Leaders Technology Investment on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Leaders Technology Investment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Leaders Technology Investment vs. Korea Steel Co
Performance |
| Timeline |
| Leaders Technology |
| Korea Steel |
Leaders Technology and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leaders Technology and Korea Steel
The main advantage of trading using opposite Leaders Technology and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leaders Technology position performs unexpectedly, Korea Steel 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 Steel will offset losses from the drop in Korea Steel's long position.| Leaders Technology vs. Koryo Credit Information | Leaders Technology vs. Dongbu Insurance Co | Leaders Technology vs. Daewoo Engineering Construction | Leaders Technology vs. Asiana Airlines |
| Korea Steel vs. Dongbang Ship Machinery | Korea Steel vs. Foodnamoo | Korea Steel vs. KCC Engineering Construction | Korea Steel vs. Shinsegae Engineering Construction |
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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