Correlation Between Korea Information and Kisan Telecom
Can any of the company-specific risk be diversified away by investing in both Korea Information and Kisan Telecom 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 Kisan Telecom 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 Kisan Telecom Co, you can compare the effects of market volatilities on Korea Information and Kisan Telecom 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 Kisan Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Kisan Telecom.
Diversification Opportunities for Korea Information and Kisan Telecom
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Kisan is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Kisan Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kisan Telecom 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 Kisan Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kisan Telecom has no effect on the direction of Korea Information i.e., Korea Information and Kisan Telecom go up and down completely randomly.
Pair Corralation between Korea Information and Kisan Telecom
Assuming the 90 days trading horizon Korea Information is expected to generate 3.26 times less return on investment than Kisan Telecom. But when comparing it to its historical volatility, Korea Information Communications is 1.15 times less risky than Kisan Telecom. It trades about 0.05 of its potential returns per unit of risk. Kisan Telecom Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 175,800 in Kisan Telecom Co on November 3, 2024 and sell it today you would earn a total of 4,600 from holding Kisan Telecom Co or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Kisan Telecom Co
Performance |
| Timeline |
| Korea Information |
| Kisan Telecom |
Korea Information and Kisan Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Kisan Telecom
The main advantage of trading using opposite Korea Information and Kisan Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Kisan Telecom 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 Kisan Telecom will offset losses from the drop in Kisan Telecom's long position.| Korea Information vs. Homecast CoLtd | Korea Information vs. Daishin Information Communications | Korea Information vs. Sangsin Energy Display | Korea Information vs. LG Household Healthcare |
| Kisan Telecom vs. Samsung Electronics Co | Kisan Telecom vs. Samsung Electronics Co | Kisan Telecom vs. Hyundai Motor Co | Kisan Telecom vs. Hyundai Motor |
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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