Correlation Between Korea Real and Nasmedia
Can any of the company-specific risk be diversified away by investing in both Korea Real and Nasmedia 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 Nasmedia 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 Nasmedia Co, you can compare the effects of market volatilities on Korea Real and Nasmedia 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 Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Nasmedia.
Diversification Opportunities for Korea Real and Nasmedia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Nasmedia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia 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 Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Korea Real i.e., Korea Real and Nasmedia go up and down completely randomly.
Pair Corralation between Korea Real and Nasmedia
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.6 times more return on investment than Nasmedia. However, Korea Real Estate is 1.66 times less risky than Nasmedia. It trades about 0.0 of its potential returns per unit of risk. Nasmedia Co is currently generating about -0.06 per unit of risk. If you would invest 100,500 in Korea Real Estate on October 13, 2024 and sell it today you would lose (300.00) from holding Korea Real Estate or give up 0.3% 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. Nasmedia Co
Performance |
| Timeline |
| Korea Real Estate |
| Nasmedia |
Korea Real and Nasmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Nasmedia
The main advantage of trading using opposite Korea Real and Nasmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Nasmedia 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 Nasmedia will offset losses from the drop in Nasmedia's long position.| Korea Real vs. Alton Sports CoLtd | Korea Real vs. GS Retail Co | Korea Real vs. Digital Multimedia Technology | Korea Real vs. ChipsMedia |
| Nasmedia vs. Xavis Co | Nasmedia vs. Hurum Co | Nasmedia vs. Daishin Balance No8 | Nasmedia vs. Korea Real Estate |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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