Correlation Between Korea Information and Xavis
Can any of the company-specific risk be diversified away by investing in both Korea Information and Xavis 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 Xavis 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 Xavis Co, you can compare the effects of market volatilities on Korea Information and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Xavis.
Diversification Opportunities for Korea Information and Xavis
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Xavis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Korea Information i.e., Korea Information and Xavis go up and down completely randomly.
Pair Corralation between Korea Information and Xavis
Assuming the 90 days trading horizon Korea Information Communications is expected to under-perform the Xavis. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Communications is 1.91 times less risky than Xavis. The stock trades about -0.03 of its potential returns per unit of risk. The Xavis Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 169,042 in Xavis Co on August 24, 2024 and sell it today you would lose (19,642) from holding Xavis Co or give up 11.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Xavis Co
Performance |
| Timeline |
| Korea Information |
| Xavis |
Korea Information and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Xavis
The main advantage of trading using opposite Korea Information and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' 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 |
| Xavis vs. Ecoplastic | Xavis vs. Korea Information Communications | Xavis vs. Lotte Energy Materials | Xavis vs. Hyosung Advanced Materials |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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