Correlation Between Korea Information and Homecast CoLtd
Can any of the company-specific risk be diversified away by investing in both Korea Information and Homecast CoLtd 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 Homecast CoLtd 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 Homecast CoLtd, you can compare the effects of market volatilities on Korea Information and Homecast CoLtd 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 Homecast CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Homecast CoLtd.
Diversification Opportunities for Korea Information and Homecast CoLtd
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korea and Homecast is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Homecast CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homecast CoLtd 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 Homecast CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homecast CoLtd has no effect on the direction of Korea Information i.e., Korea Information and Homecast CoLtd go up and down completely randomly.
Pair Corralation between Korea Information and Homecast CoLtd
Assuming the 90 days trading horizon Korea Information Communications is expected to under-perform the Homecast CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Communications is 2.26 times less risky than Homecast CoLtd. The stock trades about -0.06 of its potential returns per unit of risk. The Homecast CoLtd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 442,500 in Homecast CoLtd on November 7, 2024 and sell it today you would lose (232,500) from holding Homecast CoLtd or give up 52.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Homecast CoLtd
Performance |
| Timeline |
| Korea Information |
| Homecast CoLtd |
Korea Information and Homecast CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Homecast CoLtd
The main advantage of trading using opposite Korea Information and Homecast CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Homecast CoLtd 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 Homecast CoLtd will offset losses from the drop in Homecast CoLtd's long position.| Korea Information vs. Insung Information Co | Korea Information vs. LAKE MATERIALS LTD | Korea Information vs. RF Materials Co | Korea Information vs. Lake Materials Co |
| Homecast CoLtd vs. Kg Chemical | Homecast CoLtd vs. Ssangyong Information Communication | Homecast CoLtd vs. Tae Kyung Chemical | Homecast CoLtd vs. TK 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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