Correlation Between Stic Investments and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Stic Investments and Korean Drug 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 Stic Investments and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stic Investments and Korean Drug Co, you can compare the effects of market volatilities on Stic Investments and Korean Drug 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 Stic Investments with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stic Investments and Korean Drug.
Diversification Opportunities for Stic Investments and Korean Drug
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stic and Korean is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stic Investments and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and Stic Investments 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 Stic Investments are associated (or correlated) with Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Stic Investments i.e., Stic Investments and Korean Drug go up and down completely randomly.
Pair Corralation between Stic Investments and Korean Drug
Assuming the 90 days trading horizon Stic Investments is expected to under-perform the Korean Drug. But the stock apears to be less risky and, when comparing its historical volatility, Stic Investments is 1.08 times less risky than Korean Drug. The stock trades about -0.08 of its potential returns per unit of risk. The Korean Drug Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 457,904 in Korean Drug Co on October 21, 2024 and sell it today you would earn a total of 31,596 from holding Korean Drug Co or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stic Investments vs. Korean Drug Co
Performance |
| Timeline |
| Stic Investments |
| Korean Drug |
Stic Investments and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stic Investments and Korean Drug
The main advantage of trading using opposite Stic Investments and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stic Investments position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Stic Investments vs. KB Financial Group | Stic Investments vs. Industrial Bank | Stic Investments vs. Daejung Chemicals Metals | Stic Investments vs. InfoBank |
| Korean Drug vs. Mobileleader CoLtd | Korean Drug vs. GS Retail Co | Korean Drug vs. Nable Communications | Korean Drug vs. PJ Metal 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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