Correlation Between Korea Real and Worldex Industry
Can any of the company-specific risk be diversified away by investing in both Korea Real and Worldex Industry 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 Worldex Industry 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 Worldex Industry Trading, you can compare the effects of market volatilities on Korea Real and Worldex Industry 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 Worldex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Worldex Industry.
Diversification Opportunities for Korea Real and Worldex Industry
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korea and Worldex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Worldex Industry Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldex Industry Trading 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 Worldex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldex Industry Trading has no effect on the direction of Korea Real i.e., Korea Real and Worldex Industry go up and down completely randomly.
Pair Corralation between Korea Real and Worldex Industry
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Worldex Industry. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 8.25 times less risky than Worldex Industry. The stock trades about -0.04 of its potential returns per unit of risk. The Worldex Industry Trading is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,694,000 in Worldex Industry Trading on October 30, 2024 and sell it today you would earn a total of 66,000 from holding Worldex Industry Trading or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Worldex Industry Trading
Performance |
| Timeline |
| Korea Real Estate |
| Worldex Industry Trading |
Korea Real and Worldex Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Worldex Industry
The main advantage of trading using opposite Korea Real and Worldex Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Worldex Industry 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 Worldex Industry will offset losses from the drop in Worldex Industry's long position.| Korea Real vs. Dongbang Transport Logistics | Korea Real vs. Heungkuk Metaltech CoLtd | Korea Real vs. Haitai Confectionery Foods | Korea Real vs. Jin Air Co |
| Worldex Industry vs. Samsung Electronics Co | Worldex Industry vs. Samsung Electronics Co | Worldex Industry vs. SK Hynix | Worldex Industry vs. HMM Co |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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