Correlation Between Lee Ku and Insung Information
Can any of the company-specific risk be diversified away by investing in both Lee Ku and Insung Information 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 Lee Ku and Insung Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lee Ku Industrial and Insung Information Co, you can compare the effects of market volatilities on Lee Ku and Insung Information 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 Lee Ku with a short position of Insung Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Ku and Insung Information.
Diversification Opportunities for Lee Ku and Insung Information
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lee and Insung is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lee Ku Industrial and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung Information and Lee Ku 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 Lee Ku Industrial are associated (or correlated) with Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of Lee Ku i.e., Lee Ku and Insung Information go up and down completely randomly.
Pair Corralation between Lee Ku and Insung Information
Assuming the 90 days trading horizon Lee Ku Industrial is expected to generate 0.94 times more return on investment than Insung Information. However, Lee Ku Industrial is 1.07 times less risky than Insung Information. It trades about 0.07 of its potential returns per unit of risk. Insung Information Co is currently generating about 0.01 per unit of risk. If you would invest 395,500 in Lee Ku Industrial on October 30, 2024 and sell it today you would earn a total of 27,000 from holding Lee Ku Industrial or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lee Ku Industrial vs. Insung Information Co
Performance |
| Timeline |
| Lee Ku Industrial |
| Insung Information |
Lee Ku and Insung Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Ku and Insung Information
The main advantage of trading using opposite Lee Ku and Insung Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Ku position performs unexpectedly, Insung Information 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 Insung Information will offset losses from the drop in Insung Information's long position.| Lee Ku vs. Vitzro Tech Co | Lee Ku vs. FNSTech Co | Lee Ku vs. KPX Green Chemical | Lee Ku vs. Daejung Chemicals Metals |
| Insung Information vs. Samsung Electronics Co | Insung Information vs. Samsung Electronics Co | Insung Information vs. SK Hynix | Insung Information vs. HMM 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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