Correlation Between Korea Real and Ecoplastic
Can any of the company-specific risk be diversified away by investing in both Korea Real and Ecoplastic 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 Ecoplastic 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 Ecoplastic, you can compare the effects of market volatilities on Korea Real and Ecoplastic 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 Ecoplastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Ecoplastic.
Diversification Opportunities for Korea Real and Ecoplastic
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Ecoplastic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of Korea Real i.e., Korea Real and Ecoplastic go up and down completely randomly.
Pair Corralation between Korea Real and Ecoplastic
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.18 times more return on investment than Ecoplastic. However, Korea Real Estate is 5.52 times less risky than Ecoplastic. It trades about -0.11 of its potential returns per unit of risk. Ecoplastic is currently generating about -0.11 per unit of risk. If you would invest 102,900 in Korea Real Estate on September 12, 2024 and sell it today you would lose (2,000) from holding Korea Real Estate or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Ecoplastic
Performance |
| Timeline |
| Korea Real Estate |
| Ecoplastic |
Korea Real and Ecoplastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Ecoplastic
The main advantage of trading using opposite Korea Real and Ecoplastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Ecoplastic 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 Ecoplastic will offset losses from the drop in Ecoplastic'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 |
| Ecoplastic vs. Daou Data Corp | Ecoplastic vs. Solution Advanced Technology | Ecoplastic vs. Busan Industrial Co | Ecoplastic vs. Busan Ind |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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