Correlation Between Korea Information and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Korea Information and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on Korea Information and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Iljin Display.
Diversification Opportunities for Korea Information and Iljin Display
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Iljin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Korea Information i.e., Korea Information and Iljin Display go up and down completely randomly.
Pair Corralation between Korea Information and Iljin Display
Assuming the 90 days trading horizon Korea Information Communications is expected to under-perform the Iljin Display. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Communications is 1.4 times less risky than Iljin Display. The stock trades about -0.02 of its potential returns per unit of risk. The Iljin Display is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 128,000 in Iljin Display on September 3, 2024 and sell it today you would lose (42,100) from holding Iljin Display or give up 32.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Iljin Display
Performance |
| Timeline |
| Korea Information |
| Iljin Display |
Korea Information and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Iljin Display
The main advantage of trading using opposite Korea Information and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| Korea Information vs. Cloud Air CoLtd | Korea Information vs. Genie Music | Korea Information vs. Samlip General Foods | Korea Information vs. Organic Special Pet |
| Iljin Display vs. Hankook Steel Co | Iljin Display vs. Genie Music | Iljin Display vs. Korea Shipbuilding Offshore | Iljin Display vs. Hanil Iron Steel |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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