Correlation Between Korea Real and Genie Music
Can any of the company-specific risk be diversified away by investing in both Korea Real and Genie Music 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 Genie Music 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 Genie Music, you can compare the effects of market volatilities on Korea Real and Genie Music 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 Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Genie Music.
Diversification Opportunities for Korea Real and Genie Music
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Genie is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music 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 Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Korea Real i.e., Korea Real and Genie Music go up and down completely randomly.
Pair Corralation between Korea Real and Genie Music
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Genie Music. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 2.07 times less risky than Genie Music. The stock trades about -0.02 of its potential returns per unit of risk. The Genie Music is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 197,400 in Genie Music on October 11, 2024 and sell it today you would earn a total of 16,600 from holding Genie Music or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Genie Music
Performance |
| Timeline |
| Korea Real Estate |
| Genie Music |
Korea Real and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Genie Music
The main advantage of trading using opposite Korea Real and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.| Korea Real vs. V One Tech Co | Korea Real vs. Yura Tech Co | Korea Real vs. Narae Nanotech Corp | Korea Real vs. A Tech Solution Co |
| Genie Music vs. National Plastic Co | Genie Music vs. Shinil Electronics Co | Genie Music vs. Samji Electronics Co | Genie Music vs. Green Cross Medical |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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