Correlation Between Korea Information and Stic Investments
Can any of the company-specific risk be diversified away by investing in both Korea Information and Stic Investments 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 Stic Investments 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 Stic Investments, you can compare the effects of market volatilities on Korea Information and Stic Investments 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 Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Stic Investments.
Diversification Opportunities for Korea Information and Stic Investments
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Stic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments 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 Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Korea Information i.e., Korea Information and Stic Investments go up and down completely randomly.
Pair Corralation between Korea Information and Stic Investments
Assuming the 90 days trading horizon Korea Information Communications is expected to generate 0.62 times more return on investment than Stic Investments. However, Korea Information Communications is 1.6 times less risky than Stic Investments. It trades about -0.01 of its potential returns per unit of risk. Stic Investments is currently generating about -0.06 per unit of risk. If you would invest 852,000 in Korea Information Communications on October 17, 2024 and sell it today you would lose (36,000) from holding Korea Information Communications or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Stic Investments
Performance |
| Timeline |
| Korea Information |
| Stic Investments |
Korea Information and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Stic Investments
The main advantage of trading using opposite Korea Information and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.| Korea Information vs. JC Chemical Co | Korea Information vs. Youl Chon Chemical | Korea Information vs. Youngchang Chemical Co | Korea Information vs. Korea Petro Chemical |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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