Correlation Between Korea Real and IQuest
Can any of the company-specific risk be diversified away by investing in both Korea Real and IQuest 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 IQuest 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 IQuest Co, you can compare the effects of market volatilities on Korea Real and IQuest 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 IQuest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and IQuest.
Diversification Opportunities for Korea Real and IQuest
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and IQuest is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest 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 IQuest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQuest has no effect on the direction of Korea Real i.e., Korea Real and IQuest go up and down completely randomly.
Pair Corralation between Korea Real and IQuest
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the IQuest. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 3.21 times less risky than IQuest. The stock trades about -0.12 of its potential returns per unit of risk. The IQuest Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 220,792 in IQuest Co on November 2, 2024 and sell it today you would earn a total of 24,708 from holding IQuest Co or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. IQuest Co
Performance |
| Timeline |
| Korea Real Estate |
| IQuest |
Korea Real and IQuest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and IQuest
The main advantage of trading using opposite Korea Real and IQuest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, IQuest 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 IQuest will offset losses from the drop in IQuest's long position.| Korea Real vs. Lotte Data Communication | Korea Real vs. Kukil Metal Co | Korea Real vs. SK Chemicals Co | Korea Real vs. NICE Information Service |
| IQuest vs. Samsung Electronics Co | IQuest vs. Samsung Electronics Co | IQuest vs. LG Energy Solution | IQuest vs. SK Hynix |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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