Correlation Between ABCO Electronics and Korea Information
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and Korea Information 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 ABCO Electronics and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and Korea Information Communications, you can compare the effects of market volatilities on ABCO Electronics and Korea Information 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 ABCO Electronics with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Korea Information.
Diversification Opportunities for ABCO Electronics and Korea Information
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABCO and Korea is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and ABCO Electronics 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 ABCO Electronics Co are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and Korea Information go up and down completely randomly.
Pair Corralation between ABCO Electronics and Korea Information
Assuming the 90 days trading horizon ABCO Electronics Co is expected to generate 1.58 times more return on investment than Korea Information. However, ABCO Electronics is 1.58 times more volatile than Korea Information Communications. It trades about 0.32 of its potential returns per unit of risk. Korea Information Communications is currently generating about 0.13 per unit of risk. If you would invest 445,000 in ABCO Electronics Co on October 12, 2024 and sell it today you would earn a total of 75,000 from holding ABCO Electronics Co or generate 16.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. Korea Information Communicatio
Performance |
| Timeline |
| ABCO Electronics |
| Korea Information |
ABCO Electronics and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and Korea Information
The main advantage of trading using opposite ABCO Electronics and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| ABCO Electronics vs. KMH Hitech Co | ABCO Electronics vs. GemVaxKAEL CoLtd | ABCO Electronics vs. Bosung Power Technology | ABCO Electronics vs. Busan Industrial Co |
| Korea Information vs. Pureun Mutual Savings | Korea Information vs. Samyoung Electronics Co | Korea Information vs. ABCO Electronics Co | Korea Information vs. Netmarble Games Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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