Correlation Between Paradise and INSUN Environmental
Can any of the company-specific risk be diversified away by investing in both Paradise 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 Paradise and INSUN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paradise Co and INSUN Environmental New, you can compare the effects of market volatilities on Paradise 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 Paradise with a short position of INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradise and INSUN Environmental.
Diversification Opportunities for Paradise and INSUN Environmental
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Paradise and INSUN is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Paradise Co 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 Paradise 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 Paradise Co 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 Paradise i.e., Paradise and INSUN Environmental go up and down completely randomly.
Pair Corralation between Paradise and INSUN Environmental
Assuming the 90 days trading horizon Paradise Co is expected to under-perform the INSUN Environmental. In addition to that, Paradise is 1.26 times more volatile than INSUN Environmental New. It trades about -0.05 of its total potential returns per unit of risk. INSUN Environmental New is currently generating about -0.05 per unit of volatility. If you would invest 857,000 in INSUN Environmental New on September 26, 2024 and sell it today you would lose (312,000) from holding INSUN Environmental New or give up 36.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Paradise Co vs. INSUN Environmental New
Performance |
| Timeline |
| Paradise |
| INSUN Environmental New |
Paradise and INSUN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paradise and INSUN Environmental
The main advantage of trading using opposite Paradise and INSUN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradise 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.| Paradise vs. Woori Technology Investment | Paradise vs. Samsung Card Co | Paradise vs. Korea Real Estate | Paradise vs. CHOROKBAEM PANY Co |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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