Correlation Between Korea Ratings and Nable Communications
Can any of the company-specific risk be diversified away by investing in both Korea Ratings and Nable Communications 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 Nable Communications 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 Nable Communications, you can compare the effects of market volatilities on Korea Ratings and Nable Communications 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 Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Ratings and Nable Communications.
Diversification Opportunities for Korea Ratings and Nable Communications
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Nable is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications 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 Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Korea Ratings i.e., Korea Ratings and Nable Communications go up and down completely randomly.
Pair Corralation between Korea Ratings and Nable Communications
Assuming the 90 days trading horizon Korea Ratings Co is expected to generate 0.5 times more return on investment than Nable Communications. However, Korea Ratings Co is 2.0 times less risky than Nable Communications. It trades about 0.32 of its potential returns per unit of risk. Nable Communications is currently generating about 0.07 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Ratings Co vs. Nable Communications
Performance |
| Timeline |
| Korea Ratings |
| Nable Communications |
Korea Ratings and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Ratings and Nable Communications
The main advantage of trading using opposite Korea Ratings and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Ratings position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' 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 |
| Nable Communications vs. Korea Real Estate | Nable Communications vs. Korea Ratings Co | Nable Communications vs. IQuest Co | Nable Communications 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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