Correlation Between Nepes and Korea Real
Can any of the company-specific risk be diversified away by investing in both Nepes and Korea Real 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 Nepes and Korea Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nepes and Korea Real Estate, you can compare the effects of market volatilities on Nepes and Korea Real 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 Nepes with a short position of Korea Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nepes and Korea Real.
Diversification Opportunities for Nepes and Korea Real
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nepes and Korea is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nepes and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate and Nepes 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 Nepes are associated (or correlated) with Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of Nepes i.e., Nepes and Korea Real go up and down completely randomly.
Pair Corralation between Nepes and Korea Real
Assuming the 90 days trading horizon Nepes is expected to under-perform the Korea Real. In addition to that, Nepes is 4.56 times more volatile than Korea Real Estate. It trades about -0.2 of its total potential returns per unit of risk. Korea Real Estate is currently generating about -0.07 per unit of volatility. If you would invest 104,000 in Korea Real Estate on August 28, 2024 and sell it today you would lose (1,000.00) from holding Korea Real Estate or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nepes vs. Korea Real Estate
Performance |
| Timeline |
| Nepes |
| Korea Real Estate |
Nepes and Korea Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nepes and Korea Real
The main advantage of trading using opposite Nepes and Korea Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nepes position performs unexpectedly, Korea Real 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 Real will offset losses from the drop in Korea Real's long position.The idea behind Nepes and Korea Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Korea Real vs. Samsung Electronics Co | Korea Real vs. Samsung Electronics Co | Korea Real vs. LG Energy Solution | Korea Real vs. SK Hynix |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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