Correlation Between Korea Ratings and DAEA TI
Can any of the company-specific risk be diversified away by investing in both Korea Ratings and DAEA TI 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 DAEA TI 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 DAEA TI Co, you can compare the effects of market volatilities on Korea Ratings and DAEA TI 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 DAEA TI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Ratings and DAEA TI.
Diversification Opportunities for Korea Ratings and DAEA TI
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and DAEA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and DAEA TI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEA TI 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 DAEA TI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEA TI has no effect on the direction of Korea Ratings i.e., Korea Ratings and DAEA TI go up and down completely randomly.
Pair Corralation between Korea Ratings and DAEA TI
Assuming the 90 days trading horizon Korea Ratings is expected to generate 1.74 times less return on investment than DAEA TI. But when comparing it to its historical volatility, Korea Ratings Co is 4.52 times less risky than DAEA TI. It trades about 0.31 of its potential returns per unit of risk. DAEA TI Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 262,500 in DAEA TI Co on August 29, 2024 and sell it today you would earn a total of 19,500 from holding DAEA TI Co or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Ratings Co vs. DAEA TI Co
Performance |
| Timeline |
| Korea Ratings |
| DAEA TI |
Korea Ratings and DAEA TI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Ratings and DAEA TI
The main advantage of trading using opposite Korea Ratings and DAEA TI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Ratings position performs unexpectedly, DAEA TI 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 DAEA TI will offset losses from the drop in DAEA TI's long position.| Korea Ratings vs. Kukdo Chemical Co | Korea Ratings vs. Daehan Synthetic Fiber | Korea Ratings vs. Youngbo Chemical Co | Korea Ratings vs. LG Electronics Pfd |
| DAEA TI vs. EO Technics Co | DAEA TI vs. EASY HOLDINGS Co | DAEA TI vs. Nepes | DAEA TI vs. JUSUNG ENGINEERING 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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