Correlation Between Korea Real and Korea Information
Can any of the company-specific risk be diversified away by investing in both Korea Real and Korea Information 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 Korea Information 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 Korea Information Communications, you can compare the effects of market volatilities on Korea Real and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Korea Information.
Diversification Opportunities for Korea Real and Korea Information
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Korea is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Korea Real i.e., Korea Real and Korea Information go up and down completely randomly.
Pair Corralation between Korea Real and Korea Information
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Korea Information. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 1.97 times less risky than Korea Information. The stock trades about -0.06 of its potential returns per unit of risk. The Korea Information Communications is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 935,000 in Korea Information Communications on August 28, 2024 and sell it today you would lose (116,000) from holding Korea Information Communications or give up 12.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Korea Information Communicatio
Performance |
| Timeline |
| Korea Real Estate |
| Korea Information |
Korea Real and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Korea Information
The main advantage of trading using opposite Korea Real and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information'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 |
| Korea Information vs. Korea Real Estate | Korea Information vs. Korea Ratings Co | Korea Information vs. IQuest Co | Korea Information 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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