Correlation Between Insung Information and Xavis
Can any of the company-specific risk be diversified away by investing in both Insung 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 Insung Information and Xavis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Xavis Co, you can compare the effects of market volatilities on Insung 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 Insung Information with a short position of Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Xavis.
Diversification Opportunities for Insung Information and Xavis
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insung and Xavis is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis and Insung 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 Insung Information Co 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 Insung Information i.e., Insung Information and Xavis go up and down completely randomly.
Pair Corralation between Insung Information and Xavis
Assuming the 90 days trading horizon Insung Information Co is expected to generate 0.93 times more return on investment than Xavis. However, Insung Information Co is 1.08 times less risky than Xavis. It trades about -0.22 of its potential returns per unit of risk. Xavis Co is currently generating about -0.47 per unit of risk. If you would invest 214,000 in Insung Information Co on September 1, 2024 and sell it today you would lose (25,000) from holding Insung Information Co or give up 11.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. Xavis Co
Performance |
| Timeline |
| Insung Information |
| Xavis |
Insung Information and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Xavis
The main advantage of trading using opposite Insung Information and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung 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.| Insung Information vs. Dongsin Engineering Construction | Insung Information vs. Doosan Fuel Cell | Insung Information vs. Daishin Balance 1 | Insung Information vs. Total Soft Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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