Correlation Between Korea Real and Alton Sports
Can any of the company-specific risk be diversified away by investing in both Korea Real and Alton Sports 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 Alton Sports 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 Alton Sports CoLtd, you can compare the effects of market volatilities on Korea Real and Alton Sports 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 Alton Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Alton Sports.
Diversification Opportunities for Korea Real and Alton Sports
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Alton is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of Korea Real i.e., Korea Real and Alton Sports go up and down completely randomly.
Pair Corralation between Korea Real and Alton Sports
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.69 times more return on investment than Alton Sports. However, Korea Real Estate is 1.44 times less risky than Alton Sports. It trades about -0.11 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.22 per unit of risk. If you would invest 106,500 in Korea Real Estate on September 4, 2024 and sell it today you would lose (5,000) from holding Korea Real Estate or give up 4.69% 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. Alton Sports CoLtd
Performance |
| Timeline |
| Korea Real Estate |
| Alton Sports CoLtd |
Korea Real and Alton Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Alton Sports
The main advantage of trading using opposite Korea Real and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' long position.| Korea Real vs. JYP Entertainment Corp | Korea Real vs. SKONEC Entertainment Co | Korea Real vs. GS Engineering Construction | Korea Real vs. KEPCO Engineering Construction |
| Alton Sports vs. Korea Real Estate | Alton Sports vs. Busan Industrial Co | Alton Sports vs. UNISEM Co | Alton Sports vs. RPBio Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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