Correlation Between Korea Information and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both Korea Information and Korea Alcohol 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 Korea Alcohol 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 Korea Alcohol Industrial, you can compare the effects of market volatilities on Korea Information and Korea Alcohol 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 Korea Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Korea Alcohol.
Diversification Opportunities for Korea Information and Korea Alcohol
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Korea is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial 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 Korea Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of Korea Information i.e., Korea Information and Korea Alcohol go up and down completely randomly.
Pair Corralation between Korea Information and Korea Alcohol
Assuming the 90 days trading horizon Korea Information is expected to generate 1.77 times less return on investment than Korea Alcohol. In addition to that, Korea Information is 1.25 times more volatile than Korea Alcohol Industrial. It trades about 0.12 of its total potential returns per unit of risk. Korea Alcohol Industrial is currently generating about 0.26 per unit of volatility. If you would invest 829,000 in Korea Alcohol Industrial on October 28, 2024 and sell it today you would earn a total of 31,000 from holding Korea Alcohol Industrial or generate 3.74% 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. Korea Alcohol Industrial
Performance |
| Timeline |
| Korea Information |
| Korea Alcohol Industrial |
Korea Information and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Korea Alcohol
The main advantage of trading using opposite Korea Information and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Korea Alcohol 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 Alcohol will offset losses from the drop in Korea Alcohol's long position.| Korea Information vs. Settlebank | Korea Information vs. Digital Multimedia Technology | Korea Information vs. BNK Financial Group | Korea Information vs. Korean Reinsurance Co |
| Korea Alcohol vs. DB Financial Investment | Korea Alcohol vs. Woori Technology Investment | Korea Alcohol vs. Leaders Technology Investment | Korea Alcohol vs. Handok Clean Tech |
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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