Correlation Between Korea Real and IM CoLtd
Can any of the company-specific risk be diversified away by investing in both Korea Real and IM CoLtd 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 IM CoLtd 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 IM CoLtd, you can compare the effects of market volatilities on Korea Real and IM CoLtd 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 IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and IM CoLtd.
Diversification Opportunities for Korea Real and IM CoLtd
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and 101390 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd 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 IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of Korea Real i.e., Korea Real and IM CoLtd go up and down completely randomly.
Pair Corralation between Korea Real and IM CoLtd
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.2 times more return on investment than IM CoLtd. However, Korea Real Estate is 4.93 times less risky than IM CoLtd. It trades about -0.12 of its potential returns per unit of risk. IM CoLtd is currently generating about -0.28 per unit of risk. If you would invest 104,300 in Korea Real Estate on September 1, 2024 and sell it today you would lose (1,900) from holding Korea Real Estate or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. IM CoLtd
Performance |
| Timeline |
| Korea Real Estate |
| IM CoLtd |
Korea Real and IM CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and IM CoLtd
The main advantage of trading using opposite Korea Real and IM CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, IM CoLtd 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 IM CoLtd will offset losses from the drop in IM CoLtd'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 |
| IM CoLtd vs. Dongsin Engineering Construction | IM CoLtd vs. Doosan Fuel Cell | IM CoLtd vs. Daishin Balance 1 | IM CoLtd 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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