Correlation Between Korea Real and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Korea Real and Korea Computer 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 Computer 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 Computer, you can compare the effects of market volatilities on Korea Real and Korea Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Korea Computer.
Diversification Opportunities for Korea Real and Korea Computer
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korea and Korea is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Korea Real i.e., Korea Real and Korea Computer go up and down completely randomly.
Pair Corralation between Korea Real and Korea Computer
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 3.02 times less risky than Korea Computer. The stock trades about -0.05 of its potential returns per unit of risk. The Korea Computer is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 431,676 in Korea Computer on August 27, 2024 and sell it today you would earn a total of 113,324 from holding Korea Computer or generate 26.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Korea Computer
Performance |
| Timeline |
| Korea Real Estate |
| Korea Computer |
Korea Real and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Korea Computer
The main advantage of trading using opposite Korea Real and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer'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 Computer vs. Korea Real Estate | Korea Computer vs. Korea Ratings Co | Korea Computer vs. IQuest Co | Korea Computer 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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