Correlation Between Korea Information and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both Korea Information and Oriental Precision 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 Oriental Precision 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 Oriental Precision Engineering, you can compare the effects of market volatilities on Korea Information and Oriental Precision 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 Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Oriental Precision.
Diversification Opportunities for Korea Information and Oriental Precision
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Oriental is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision 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 Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of Korea Information i.e., Korea Information and Oriental Precision go up and down completely randomly.
Pair Corralation between Korea Information and Oriental Precision
Assuming the 90 days trading horizon Korea Information is expected to generate 3.56 times less return on investment than Oriental Precision. But when comparing it to its historical volatility, Korea Information Communications is 1.88 times less risky than Oriental Precision. It trades about 0.13 of its potential returns per unit of risk. Oriental Precision Engineering is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 483,028 in Oriental Precision Engineering on October 12, 2024 and sell it today you would earn a total of 68,972 from holding Oriental Precision Engineering or generate 14.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Oriental Precision Engineering
Performance |
| Timeline |
| Korea Information |
| Oriental Precision |
Korea Information and Oriental Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Oriental Precision
The main advantage of trading using opposite Korea Information and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.| Korea Information vs. Pureun Mutual Savings | Korea Information vs. Samyoung Electronics Co | Korea Information vs. ABCO Electronics Co | Korea Information vs. Netmarble Games Corp |
| Oriental Precision vs. TS Investment Corp | Oriental Precision vs. Atinum Investment Co | Oriental Precision vs. Korea Information Communications | Oriental Precision vs. Dongbang Transport Logistics |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |