Correlation Between Korea Real and High Tech
Can any of the company-specific risk be diversified away by investing in both Korea Real and High Tech 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 High Tech 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 High Tech Pharm, you can compare the effects of market volatilities on Korea Real and High Tech 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 High Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and High Tech.
Diversification Opportunities for Korea Real and High Tech
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and High is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and High Tech Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tech Pharm 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 High Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tech Pharm has no effect on the direction of Korea Real i.e., Korea Real and High Tech go up and down completely randomly.
Pair Corralation between Korea Real and High Tech
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the High Tech. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 3.26 times less risky than High Tech. The stock trades about -0.14 of its potential returns per unit of risk. The High Tech Pharm is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,530,000 in High Tech Pharm on August 25, 2024 and sell it today you would lose (13,000) from holding High Tech Pharm or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Korea Real Estate vs. High Tech Pharm
Performance |
| Timeline |
| Korea Real Estate |
| High Tech Pharm |
Korea Real and High Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and High Tech
The main advantage of trading using opposite Korea Real and High Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, High Tech 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 High Tech will offset losses from the drop in High Tech's long position.| Korea Real vs. Lion Chemtech Co | Korea Real vs. Ssangyong Information Communication | Korea Real vs. LG Household Healthcare | Korea Real vs. Vitzro Tech Co |
| High Tech vs. DB Financial Investment | High Tech vs. Total Soft Bank | High Tech vs. Korean Reinsurance Co | High Tech vs. Hyundai Home Shopping |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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