Correlation Between Korea Environment and INSUN Environmental
Can any of the company-specific risk be diversified away by investing in both Korea Environment and INSUN Environmental 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 Environment and INSUN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Environment Technology and INSUN Environmental New, you can compare the effects of market volatilities on Korea Environment and INSUN Environmental 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 Environment with a short position of INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Environment and INSUN Environmental.
Diversification Opportunities for Korea Environment and INSUN Environmental
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and INSUN is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Korea Environment Technology and INSUN Environmental New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSUN Environmental New and Korea Environment 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 Environment Technology are associated (or correlated) with INSUN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSUN Environmental New has no effect on the direction of Korea Environment i.e., Korea Environment and INSUN Environmental go up and down completely randomly.
Pair Corralation between Korea Environment and INSUN Environmental
Assuming the 90 days trading horizon Korea Environment Technology is expected to generate 0.84 times more return on investment than INSUN Environmental. However, Korea Environment Technology is 1.19 times less risky than INSUN Environmental. It trades about 0.2 of its potential returns per unit of risk. INSUN Environmental New is currently generating about 0.0 per unit of risk. If you would invest 682,155 in Korea Environment Technology on October 14, 2024 and sell it today you would earn a total of 210,845 from holding Korea Environment Technology or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Environment Technology vs. INSUN Environmental New
Performance |
| Timeline |
| Korea Environment |
| INSUN Environmental New |
Korea Environment and INSUN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Environment and INSUN Environmental
The main advantage of trading using opposite Korea Environment and INSUN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Environment position performs unexpectedly, INSUN Environmental 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 INSUN Environmental will offset losses from the drop in INSUN Environmental's long position.| Korea Environment vs. Woori Financial Group | Korea Environment vs. Jb Financial | Korea Environment vs. Nh Investment And | Korea Environment vs. Hyundai Heavy Industries |
| INSUN Environmental vs. Korea Environment Technology | INSUN Environmental vs. Paradise Co | INSUN Environmental vs. Seoul Semiconductor Co | INSUN Environmental vs. JUSUNG ENGINEERING 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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