Correlation Between Korea Ratings and IQuest
Can any of the company-specific risk be diversified away by investing in both Korea Ratings 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 Ratings and IQuest 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 IQuest Co, you can compare the effects of market volatilities on Korea Ratings 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 Ratings with a short position of IQuest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Ratings and IQuest.
Diversification Opportunities for Korea Ratings and IQuest
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and IQuest is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest 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 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 Ratings i.e., Korea Ratings and IQuest go up and down completely randomly.
Pair Corralation between Korea Ratings and IQuest
Assuming the 90 days trading horizon Korea Ratings is expected to generate 2.42 times less return on investment than IQuest. But when comparing it to its historical volatility, Korea Ratings Co is 4.32 times less risky than IQuest. It trades about 0.1 of its potential returns per unit of risk. 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Ratings Co vs. IQuest Co
Performance |
| Timeline |
| Korea Ratings |
| IQuest |
Korea Ratings and IQuest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Ratings and IQuest
The main advantage of trading using opposite Korea Ratings and IQuest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Ratings 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 Ratings vs. Asiana Airlines | Korea Ratings vs. Innowireless Co | Korea Ratings vs. Samyoung Electronics Co | Korea Ratings vs. Daishin Information Communications |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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