Correlation Between Insung Information and Moadata
Can any of the company-specific risk be diversified away by investing in both Insung Information and Moadata 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 Moadata 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 Moadata Co, you can compare the effects of market volatilities on Insung Information and Moadata 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 Moadata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Moadata.
Diversification Opportunities for Insung Information and Moadata
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insung and Moadata is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Moadata Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moadata 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 Moadata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moadata has no effect on the direction of Insung Information i.e., Insung Information and Moadata go up and down completely randomly.
Pair Corralation between Insung Information and Moadata
Assuming the 90 days trading horizon Insung Information Co is expected to under-perform the Moadata. But the stock apears to be less risky and, when comparing its historical volatility, Insung Information Co is 1.26 times less risky than Moadata. The stock trades about -0.12 of its potential returns per unit of risk. The Moadata Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 150,800 in Moadata Co on November 2, 2024 and sell it today you would lose (14,800) from holding Moadata Co or give up 9.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. Moadata Co
Performance |
| Timeline |
| Insung Information |
| Moadata |
Insung Information and Moadata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Moadata
The main advantage of trading using opposite Insung Information and Moadata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Moadata 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 Moadata will offset losses from the drop in Moadata's long position.| Insung Information vs. Hwangkum Steel Technology | Insung Information vs. Nable Communications | Insung Information vs. Korean Drug Co | Insung Information vs. Cots Technology Co |
| Moadata vs. Dongbang Ship Machinery | Moadata vs. Hanil Chemical Ind | Moadata vs. Kg Chemical | Moadata vs. Dongnam Chemical 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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