Correlation Between Korea Information and Mercury
Can any of the company-specific risk be diversified away by investing in both Korea Information and Mercury 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 Mercury 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 Mercury, you can compare the effects of market volatilities on Korea Information and Mercury 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 Mercury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Mercury.
Diversification Opportunities for Korea Information and Mercury
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Mercury is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Mercury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury 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 Mercury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury has no effect on the direction of Korea Information i.e., Korea Information and Mercury go up and down completely randomly.
Pair Corralation between Korea Information and Mercury
Assuming the 90 days trading horizon Korea Information is expected to generate 16.83 times less return on investment than Mercury. But when comparing it to its historical volatility, Korea Information Communications is 5.33 times less risky than Mercury. It trades about 0.03 of its potential returns per unit of risk. Mercury is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 361,000 in Mercury on September 2, 2024 and sell it today you would earn a total of 28,000 from holding Mercury or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Mercury
Performance |
| Timeline |
| Korea Information |
| Mercury |
Korea Information and Mercury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Mercury
The main advantage of trading using opposite Korea Information and Mercury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Mercury 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 Mercury will offset losses from the drop in Mercury's long position.| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
| Mercury vs. Iljin Display | Mercury vs. Nable Communications | Mercury vs. Korea Information Communications | Mercury vs. Jeju Beer Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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