Correlation Between Korea Information and DoubleU Games

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Can any of the company-specific risk be diversified away by investing in both Korea Information and DoubleU Games 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 DoubleU Games 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 DoubleU Games Co, you can compare the effects of market volatilities on Korea Information and DoubleU Games 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 DoubleU Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and DoubleU Games.

Diversification Opportunities for Korea Information and DoubleU Games

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Korea and DoubleU is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and DoubleU Games Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleU Games 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 DoubleU Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleU Games has no effect on the direction of Korea Information i.e., Korea Information and DoubleU Games go up and down completely randomly.

Pair Corralation between Korea Information and DoubleU Games

Assuming the 90 days trading horizon Korea Information Communications is expected to under-perform the DoubleU Games. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Communications is 1.26 times less risky than DoubleU Games. The stock trades about -0.01 of its potential returns per unit of risk. The DoubleU Games Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,145,000  in DoubleU Games Co on September 12, 2024 and sell it today you would earn a total of  1,195,000  from holding DoubleU Games Co or generate 28.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Korea Information Communicatio  vs.  DoubleU Games Co

 Performance 
       Timeline  
Korea Information 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Korea Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
DoubleU Games 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in DoubleU Games Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DoubleU Games may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Korea Information and DoubleU Games Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Korea Information and DoubleU Games

The main advantage of trading using opposite Korea Information and DoubleU Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, DoubleU Games 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 DoubleU Games will offset losses from the drop in DoubleU Games' long position.
The idea behind Korea Information Communications and DoubleU Games Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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