Correlation Between Korea Real and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Korea Real and Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy, you can compare the effects of market volatilities on Korea Real and Namyang Dairy 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 Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Namyang Dairy.
Diversification Opportunities for Korea Real and Namyang Dairy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Namyang is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy 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 Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Korea Real i.e., Korea Real and Namyang Dairy go up and down completely randomly.
Pair Corralation between Korea Real and Namyang Dairy
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Namyang Dairy. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 57.34 times less risky than Namyang Dairy. The stock trades about -0.03 of its potential returns per unit of risk. The Namyang Dairy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,293,370 in Namyang Dairy on September 2, 2024 and sell it today you would earn a total of 2,516,630 from holding Namyang Dairy or generate 58.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Korea Real Estate vs. Namyang Dairy
Performance |
| Timeline |
| Korea Real Estate |
| Namyang Dairy |
Korea Real and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Namyang Dairy
The main advantage of trading using opposite Korea Real and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Korea Real vs. Samsung Electronics Co | Korea Real vs. Samsung Electronics Co | Korea Real vs. LG Energy Solution | Korea Real vs. SK Hynix |
| Namyang Dairy vs. Korea Real Estate | Namyang Dairy vs. Korea Ratings Co | Namyang Dairy vs. IQuest Co | Namyang Dairy vs. Wonbang Tech 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |