Correlation Between Kwang Jin and Korea Information
Can any of the company-specific risk be diversified away by investing in both Kwang Jin and Korea 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 Kwang Jin and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kwang Jin Ind and Korea Information Communications, you can compare the effects of market volatilities on Kwang Jin and Korea 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 Kwang Jin with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwang Jin and Korea Information.
Diversification Opportunities for Kwang Jin and Korea Information
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kwang and Korea is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kwang Jin Ind and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Kwang Jin 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 Kwang Jin Ind are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Kwang Jin i.e., Kwang Jin and Korea Information go up and down completely randomly.
Pair Corralation between Kwang Jin and Korea Information
Assuming the 90 days trading horizon Kwang Jin Ind is expected to under-perform the Korea Information. In addition to that, Kwang Jin is 1.74 times more volatile than Korea Information Communications. It trades about -0.06 of its total potential returns per unit of risk. Korea Information Communications is currently generating about -0.01 per unit of volatility. If you would invest 858,000 in Korea Information Communications on September 19, 2024 and sell it today you would lose (73,000) from holding Korea Information Communications or give up 8.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kwang Jin Ind vs. Korea Information Communicatio
Performance |
| Timeline |
| Kwang Jin Ind |
| Korea Information |
Kwang Jin and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwang Jin and Korea Information
The main advantage of trading using opposite Kwang Jin and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwang Jin position performs unexpectedly, Korea 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 Korea Information will offset losses from the drop in Korea Information's long position.| Kwang Jin vs. SK Telecom Co | Kwang Jin vs. Korea Information Communications | Kwang Jin vs. Hansol Homedeco Co | Kwang Jin vs. Kukil Metal Co |
| Korea Information vs. Dongwoo Farm To | Korea Information vs. GS Engineering Construction | Korea Information vs. Shinsegae Food | Korea Information vs. FOODWELL 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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