Correlation Between Korea Real and KG Eco
Can any of the company-specific risk be diversified away by investing in both Korea Real and KG Eco 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 KG Eco 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 KG Eco Technology, you can compare the effects of market volatilities on Korea Real and KG Eco 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 KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and KG Eco.
Diversification Opportunities for Korea Real and KG Eco
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and 151860 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Korea Real i.e., Korea Real and KG Eco go up and down completely randomly.
Pair Corralation between Korea Real and KG Eco
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.26 times more return on investment than KG Eco. However, Korea Real Estate is 3.9 times less risky than KG Eco. It trades about -0.05 of its potential returns per unit of risk. KG Eco Technology is currently generating about -0.02 per unit of risk. If you would invest 127,264 in Korea Real Estate on October 23, 2024 and sell it today you would lose (27,464) from holding Korea Real Estate or give up 21.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Korea Real Estate vs. KG Eco Technology
Performance |
| Timeline |
| Korea Real Estate |
| KG Eco Technology |
Korea Real and KG Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and KG Eco
The main advantage of trading using opposite Korea Real and KG Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, KG Eco 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 KG Eco will offset losses from the drop in KG Eco's long position.| Korea Real vs. Cheryong Industrial CoLtd | Korea Real vs. Kbi Metal Co | Korea Real vs. Cuckoo Homesys Co | Korea Real vs. Hannong Chemicals |
| KG Eco vs. Samsung Electronics Co | KG Eco vs. Samsung Electronics Co | KG Eco vs. SK Hynix | KG Eco 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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