Correlation Between Insung Information and RF Materials
Can any of the company-specific risk be diversified away by investing in both Insung Information and RF Materials 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 RF Materials 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 RF Materials Co, you can compare the effects of market volatilities on Insung Information and RF Materials 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and RF Materials.
Diversification Opportunities for Insung Information and RF Materials
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insung and 327260 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Insung Information i.e., Insung Information and RF Materials go up and down completely randomly.
Pair Corralation between Insung Information and RF Materials
Assuming the 90 days trading horizon Insung Information Co is expected to generate 1.66 times more return on investment than RF Materials. However, Insung Information is 1.66 times more volatile than RF Materials Co. It trades about 0.02 of its potential returns per unit of risk. RF Materials Co is currently generating about -0.05 per unit of risk. If you would invest 225,354 in Insung Information Co on October 14, 2024 and sell it today you would lose (26,554) from holding Insung Information Co or give up 11.78% 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. RF Materials Co
Performance |
| Timeline |
| Insung Information |
| RF Materials |
Insung Information and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and RF Materials
The main advantage of trading using opposite Insung Information and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' long position.| Insung Information vs. Dgb Financial | Insung Information vs. Hana Financial | Insung Information vs. Ssangyong Information Communication | Insung Information vs. Korean Reinsurance Co |
| RF Materials vs. Insung Information Co | RF Materials vs. Barunson Entertainment Arts | RF Materials vs. Lotte Rental Co | RF Materials vs. Daishin Information Communications |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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