Correlation Between Korea Real and Koh Young
Can any of the company-specific risk be diversified away by investing in both Korea Real and Koh Young 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 Koh Young 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 Koh Young Technology, you can compare the effects of market volatilities on Korea Real and Koh Young 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 Koh Young. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Koh Young.
Diversification Opportunities for Korea Real and Koh Young
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Koh is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Koh Young Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koh Young Technology 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 Koh Young. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koh Young Technology has no effect on the direction of Korea Real i.e., Korea Real and Koh Young go up and down completely randomly.
Pair Corralation between Korea Real and Koh Young
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.29 times more return on investment than Koh Young. However, Korea Real Estate is 3.47 times less risky than Koh Young. It trades about -0.09 of its potential returns per unit of risk. Koh Young Technology is currently generating about -0.55 per unit of risk. If you would invest 103,900 in Korea Real Estate on September 2, 2024 and sell it today you would lose (1,500) from holding Korea Real Estate or give up 1.44% 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. Koh Young Technology
Performance |
| Timeline |
| Korea Real Estate |
| Koh Young Technology |
Korea Real and Koh Young Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Koh Young
The main advantage of trading using opposite Korea Real and Koh Young positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Koh Young 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 Koh Young will offset losses from the drop in Koh Young'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 |
| Koh Young vs. Dongsin Engineering Construction | Koh Young vs. Doosan Fuel Cell | Koh Young vs. Daishin Balance 1 | Koh Young vs. Total Soft Bank |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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