Correlation Between Korea Information and Netmarble Games
Can any of the company-specific risk be diversified away by investing in both Korea Information and Netmarble 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 Netmarble 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 Netmarble Games Corp, you can compare the effects of market volatilities on Korea Information and Netmarble 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 Netmarble Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Netmarble Games.
Diversification Opportunities for Korea Information and Netmarble Games
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Netmarble is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Netmarble Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmarble Games Corp 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 Netmarble Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmarble Games Corp has no effect on the direction of Korea Information i.e., Korea Information and Netmarble Games go up and down completely randomly.
Pair Corralation between Korea Information and Netmarble Games
Assuming the 90 days trading horizon Korea Information Communications is expected to generate 0.52 times more return on investment than Netmarble Games. However, Korea Information Communications is 1.92 times less risky than Netmarble Games. It trades about -0.05 of its potential returns per unit of risk. Netmarble Games Corp is currently generating about -0.14 per unit of risk. If you would invest 850,000 in Korea Information Communications on August 25, 2024 and sell it today you would lose (32,000) from holding Korea Information Communications or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Korea Information Communicatio vs. Netmarble Games Corp
Performance |
| Timeline |
| Korea Information |
| Netmarble Games Corp |
Korea Information and Netmarble Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Netmarble Games
The main advantage of trading using opposite Korea Information and Netmarble Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Netmarble 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 Netmarble Games will offset losses from the drop in Netmarble Games' long position.| Korea Information vs. Korea Real Estate | Korea Information vs. Korea Ratings Co | Korea Information vs. IQuest Co | Korea Information vs. Wonbang Tech Co |
| Netmarble Games vs. Kisan Telecom Co | Netmarble Games vs. SK Chemicals Co | Netmarble Games vs. SK Telecom Co | Netmarble Games vs. Korea Information Communications |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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