Correlation Between Korea Information and Golden Bridge
Can any of the company-specific risk be diversified away by investing in both Korea Information and Golden Bridge 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 Information and Golden Bridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Communications and Golden Bridge Investment, you can compare the effects of market volatilities on Korea Information and Golden Bridge 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 Information with a short position of Golden Bridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Golden Bridge.
Diversification Opportunities for Korea Information and Golden Bridge
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Golden is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Golden Bridge Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Bridge Investment and Korea Information 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 Information Communications are associated (or correlated) with Golden Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Bridge Investment has no effect on the direction of Korea Information i.e., Korea Information and Golden Bridge go up and down completely randomly.
Pair Corralation between Korea Information and Golden Bridge
Assuming the 90 days trading horizon Korea Information Communications is expected to generate 0.59 times more return on investment than Golden Bridge. However, Korea Information Communications is 1.69 times less risky than Golden Bridge. It trades about 0.07 of its potential returns per unit of risk. Golden Bridge Investment is currently generating about -0.25 per unit of risk. If you would invest 808,000 in Korea Information Communications on August 25, 2024 and sell it today you would earn a total of 10,000 from holding Korea Information Communications or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Golden Bridge Investment
Performance |
| Timeline |
| Korea Information |
| Golden Bridge Investment |
Korea Information and Golden Bridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Golden Bridge
The main advantage of trading using opposite Korea Information and Golden Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Golden Bridge 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 Golden Bridge will offset losses from the drop in Golden Bridge's long position.| Korea Information vs. Korea Real Estate | Korea Information vs. Korea Ratings Co | Korea Information vs. IQuest Co | Korea Information vs. Wonbang Tech Co |
| Golden Bridge vs. CG Hi Tech | Golden Bridge vs. Korea Computer | Golden Bridge vs. Hankook Furniture Co | Golden Bridge vs. BIT Computer 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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