Correlation Between Korea Real and MS Autotech
Can any of the company-specific risk be diversified away by investing in both Korea Real and MS Autotech 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 MS Autotech 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 MS Autotech CoLtd, you can compare the effects of market volatilities on Korea Real and MS Autotech 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 MS Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and MS Autotech.
Diversification Opportunities for Korea Real and MS Autotech
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and 123040 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and MS Autotech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MS Autotech 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 MS Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MS Autotech CoLtd has no effect on the direction of Korea Real i.e., Korea Real and MS Autotech go up and down completely randomly.
Pair Corralation between Korea Real and MS Autotech
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.18 times more return on investment than MS Autotech. However, Korea Real Estate is 5.6 times less risky than MS Autotech. It trades about -0.11 of its potential returns per unit of risk. MS Autotech CoLtd is currently generating about -0.13 per unit of risk. If you would invest 102,900 in Korea Real Estate on September 12, 2024 and sell it today you would lose (2,000) from holding Korea Real Estate or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. MS Autotech CoLtd
Performance |
| Timeline |
| Korea Real Estate |
| MS Autotech CoLtd |
Korea Real and MS Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and MS Autotech
The main advantage of trading using opposite Korea Real and MS Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, MS Autotech 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 MS Autotech will offset losses from the drop in MS Autotech'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 |
| MS Autotech vs. Daou Data Corp | MS Autotech vs. Solution Advanced Technology | MS Autotech vs. Busan Industrial Co | MS Autotech vs. Busan Ind |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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