Correlation Between Korea Information and PlayD
Can any of the company-specific risk be diversified away by investing in both Korea Information and PlayD 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 PlayD 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 PlayD Co, you can compare the effects of market volatilities on Korea Information and PlayD 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 PlayD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and PlayD.
Diversification Opportunities for Korea Information and PlayD
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Korea and PlayD is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and PlayD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayD 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 PlayD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayD has no effect on the direction of Korea Information i.e., Korea Information and PlayD go up and down completely randomly.
Pair Corralation between Korea Information and PlayD
Assuming the 90 days trading horizon Korea Information Communications is expected to under-perform the PlayD. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Communications is 2.51 times less risky than PlayD. The stock trades about -0.07 of its potential returns per unit of risk. The PlayD Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 745,000 in PlayD Co on October 27, 2024 and sell it today you would lose (118,000) from holding PlayD Co or give up 15.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. PlayD Co
Performance |
| Timeline |
| Korea Information |
| PlayD |
Korea Information and PlayD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and PlayD
The main advantage of trading using opposite Korea Information and PlayD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, PlayD 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 PlayD will offset losses from the drop in PlayD's long position.| Korea Information vs. SEOJEON ELECTRIC MACHINERY | Korea Information vs. Keyang Electric Machinery | Korea Information vs. Nam Hwa Construction | Korea Information vs. Sungdo Engineering Construction |
| PlayD vs. KT Submarine Telecom | PlayD vs. Lotte Data Communication | PlayD vs. Kukdo Chemical Co | PlayD vs. Sejong Telecom |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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