Correlation Between Korea Information and J Steel
Can any of the company-specific risk be diversified away by investing in both Korea Information and J 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 Korea Information and J Steel 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 J Steel Co, you can compare the effects of market volatilities on Korea Information and J 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 Korea Information with a short position of J Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and J Steel.
Diversification Opportunities for Korea Information and J Steel
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and 023440 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel 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 J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of Korea Information i.e., Korea Information and J Steel go up and down completely randomly.
Pair Corralation between Korea Information and J Steel
Assuming the 90 days trading horizon Korea Information Communications is expected to under-perform the J Steel. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Communications is 2.17 times less risky than J Steel. The stock trades about -0.02 of its potential returns per unit of risk. The J Steel Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 276,000 in J Steel Co on September 3, 2024 and sell it today you would lose (97,000) from holding J Steel Co or give up 35.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. J Steel Co
Performance |
| Timeline |
| Korea Information |
| J Steel |
Korea Information and J Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and J Steel
The main advantage of trading using opposite Korea Information and J Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, J 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 J Steel will offset losses from the drop in J Steel'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 |
| J Steel vs. Samsung Electronics Co | J Steel vs. Samsung Electronics Co | J Steel vs. LG Energy Solution | J Steel vs. SK Hynix |
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.
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