Correlation Between Korea Ratings and Posco ICT
Can any of the company-specific risk be diversified away by investing in both Korea Ratings and Posco ICT 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 Ratings and Posco ICT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Ratings Co and Posco ICT, you can compare the effects of market volatilities on Korea Ratings and Posco ICT 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 Ratings with a short position of Posco ICT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Ratings and Posco ICT.
Diversification Opportunities for Korea Ratings and Posco ICT
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Posco is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and Posco ICT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco ICT and Korea Ratings 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 Ratings Co are associated (or correlated) with Posco ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco ICT has no effect on the direction of Korea Ratings i.e., Korea Ratings and Posco ICT go up and down completely randomly.
Pair Corralation between Korea Ratings and Posco ICT
Assuming the 90 days trading horizon Korea Ratings Co is expected to generate 0.19 times more return on investment than Posco ICT. However, Korea Ratings Co is 5.16 times less risky than Posco ICT. It trades about 0.23 of its potential returns per unit of risk. Posco ICT is currently generating about -0.29 per unit of risk. If you would invest 8,490,000 in Korea Ratings Co on August 31, 2024 and sell it today you would earn a total of 310,000 from holding Korea Ratings Co or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Ratings Co vs. Posco ICT
Performance |
| Timeline |
| Korea Ratings |
| Posco ICT |
Korea Ratings and Posco ICT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Ratings and Posco ICT
The main advantage of trading using opposite Korea Ratings and Posco ICT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Ratings position performs unexpectedly, Posco ICT 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 Posco ICT will offset losses from the drop in Posco ICT's long position.| Korea Ratings vs. Anam Electronics Co | Korea Ratings vs. KyungIn Electronics Co | Korea Ratings vs. Hyundai Engineering Plastics | Korea Ratings vs. Iljin Materials Co |
| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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