Correlation Between Korea Real and DB HiTek
Can any of the company-specific risk be diversified away by investing in both Korea Real and DB HiTek 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 Korea Real and DB HiTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and DB HiTek Co, you can compare the effects of market volatilities on Korea Real and DB HiTek 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 Korea Real with a short position of DB HiTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and DB HiTek.
Diversification Opportunities for Korea Real and DB HiTek
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and 000990 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and DB HiTek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB HiTek and Korea Real 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 Korea Real Estate are associated (or correlated) with DB HiTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB HiTek has no effect on the direction of Korea Real i.e., Korea Real and DB HiTek go up and down completely randomly.
Pair Corralation between Korea Real and DB HiTek
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the DB HiTek. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 2.08 times less risky than DB HiTek. The stock trades about -0.22 of its potential returns per unit of risk. The DB HiTek Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,360,000 in DB HiTek Co on October 23, 2024 and sell it today you would earn a total of 55,000 from holding DB HiTek Co or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Korea Real Estate vs. DB HiTek Co
Performance |
| Timeline |
| Korea Real Estate |
| DB HiTek |
Korea Real and DB HiTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and DB HiTek
The main advantage of trading using opposite Korea Real and DB HiTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, DB HiTek 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 DB HiTek will offset losses from the drop in DB HiTek's long position.| Korea Real vs. Cheryong Industrial CoLtd | Korea Real vs. Kbi Metal Co | Korea Real vs. Cuckoo Homesys Co | Korea Real vs. Hannong Chemicals |
| DB HiTek vs. Ilji Technology Co | DB HiTek vs. Ssangyong Information Communication | DB HiTek vs. Koh Young Technology | DB HiTek vs. Guyoung Technology 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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