Correlation Between Korea Real and Ezwelfare
Can any of the company-specific risk be diversified away by investing in both Korea Real and Ezwelfare 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 Ezwelfare 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 Ezwelfare Co, you can compare the effects of market volatilities on Korea Real and Ezwelfare 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 Ezwelfare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Ezwelfare.
Diversification Opportunities for Korea Real and Ezwelfare
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Ezwelfare is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Ezwelfare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ezwelfare 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 Ezwelfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ezwelfare has no effect on the direction of Korea Real i.e., Korea Real and Ezwelfare go up and down completely randomly.
Pair Corralation between Korea Real and Ezwelfare
Assuming the 90 days trading horizon Korea Real is expected to generate 6.01 times less return on investment than Ezwelfare. But when comparing it to its historical volatility, Korea Real Estate is 1.39 times less risky than Ezwelfare. It trades about 0.05 of its potential returns per unit of risk. Ezwelfare Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 498,292 in Ezwelfare Co on October 9, 2024 and sell it today you would earn a total of 30,708 from holding Ezwelfare Co or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Ezwelfare Co
Performance |
| Timeline |
| Korea Real Estate |
| Ezwelfare |
Korea Real and Ezwelfare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Ezwelfare
The main advantage of trading using opposite Korea Real and Ezwelfare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Ezwelfare 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 Ezwelfare will offset losses from the drop in Ezwelfare's long position.| Korea Real vs. Dongwoo Farm To | Korea Real vs. ENERGYMACHINERY KOREA CoLtd | Korea Real vs. Kukil Metal Co | Korea Real vs. Nam Hwa Construction |
| Ezwelfare vs. Insun Environment New | Ezwelfare vs. Korean Drug Co | Ezwelfare vs. Shin Steel Co | Ezwelfare vs. Seah Steel Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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