Correlation Between Korea Real and Partron
Can any of the company-specific risk be diversified away by investing in both Korea Real and Partron 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 Partron 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 Partron Co, you can compare the effects of market volatilities on Korea Real and Partron 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 Partron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Partron.
Diversification Opportunities for Korea Real and Partron
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Partron is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Partron Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partron 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 Partron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partron has no effect on the direction of Korea Real i.e., Korea Real and Partron go up and down completely randomly.
Pair Corralation between Korea Real and Partron
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Partron. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 1.31 times less risky than Partron. The stock trades about -0.06 of its potential returns per unit of risk. The Partron Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 908,811 in Partron Co on September 1, 2024 and sell it today you would lose (186,811) from holding Partron Co or give up 20.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Partron Co
Performance |
| Timeline |
| Korea Real Estate |
| Partron |
Korea Real and Partron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Partron
The main advantage of trading using opposite Korea Real and Partron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Partron 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 Partron will offset losses from the drop in Partron's long position.| Korea Real vs. DataSolution | Korea Real vs. CJ Seafood Corp | Korea Real vs. Shinsegae Information Communication | Korea Real vs. Sungdo Engineering Construction |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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