Correlation Between Korea Real and KHVATEC CoLtd
Can any of the company-specific risk be diversified away by investing in both Korea Real and KHVATEC CoLtd 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 KHVATEC CoLtd 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 KHVATEC CoLtd, you can compare the effects of market volatilities on Korea Real and KHVATEC CoLtd 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 KHVATEC CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and KHVATEC CoLtd.
Diversification Opportunities for Korea Real and KHVATEC CoLtd
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and KHVATEC is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd 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 KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of Korea Real i.e., Korea Real and KHVATEC CoLtd go up and down completely randomly.
Pair Corralation between Korea Real and KHVATEC CoLtd
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.43 times more return on investment than KHVATEC CoLtd. However, Korea Real Estate is 2.34 times less risky than KHVATEC CoLtd. It trades about 0.0 of its potential returns per unit of risk. KHVATEC CoLtd is currently generating about -0.18 per unit of risk. If you would invest 103,100 in Korea Real Estate on September 3, 2024 and sell it today you would lose (700.00) from holding Korea Real Estate or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. KHVATEC CoLtd
Performance |
| Timeline |
| Korea Real Estate |
| KHVATEC CoLtd |
Korea Real and KHVATEC CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and KHVATEC CoLtd
The main advantage of trading using opposite Korea Real and KHVATEC CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, KHVATEC CoLtd 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 KHVATEC CoLtd will offset losses from the drop in KHVATEC CoLtd's long position.| Korea Real vs. Sejong Telecom | Korea Real vs. Mobileleader CoLtd | Korea Real vs. Lotte Data Communication | Korea Real vs. Wireless Power Amplifier |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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