Correlation Between Korea Ratings and SFA Semicon
Can any of the company-specific risk be diversified away by investing in both Korea Ratings and SFA Semicon 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 SFA Semicon 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 SFA Semicon Co, you can compare the effects of market volatilities on Korea Ratings and SFA Semicon 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 SFA Semicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Ratings and SFA Semicon.
Diversification Opportunities for Korea Ratings and SFA Semicon
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and SFA is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and SFA Semicon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Semicon 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 SFA Semicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Semicon has no effect on the direction of Korea Ratings i.e., Korea Ratings and SFA Semicon go up and down completely randomly.
Pair Corralation between Korea Ratings and SFA Semicon
Assuming the 90 days trading horizon Korea Ratings Co is expected to generate 0.28 times more return on investment than SFA Semicon. However, Korea Ratings Co is 3.57 times less risky than SFA Semicon. It trades about 0.32 of its potential returns per unit of risk. SFA Semicon Co is currently generating about -0.11 per unit of risk. If you would invest 8,480,000 in Korea Ratings Co on August 29, 2024 and sell it today you would earn a total of 400,000 from holding Korea Ratings Co or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Ratings Co vs. SFA Semicon Co
Performance |
| Timeline |
| Korea Ratings |
| SFA Semicon |
Korea Ratings and SFA Semicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Ratings and SFA Semicon
The main advantage of trading using opposite Korea Ratings and SFA Semicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Ratings position performs unexpectedly, SFA Semicon 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 SFA Semicon will offset losses from the drop in SFA Semicon's long position.| Korea Ratings vs. Samsung Electronics Co | Korea Ratings vs. Samsung Electronics Co | Korea Ratings vs. LG Energy Solution | Korea Ratings vs. SK Hynix |
| SFA Semicon vs. Korea Real Estate | SFA Semicon vs. Korea Ratings Co | SFA Semicon vs. IQuest Co | SFA Semicon vs. Wonbang Tech 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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