Correlation Between SCI Information and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both SCI Information and KakaoBank Corp 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 SCI Information and KakaoBank Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Information Service and KakaoBank Corp, you can compare the effects of market volatilities on SCI Information and KakaoBank Corp 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 SCI Information with a short position of KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and KakaoBank Corp.
Diversification Opportunities for SCI Information and KakaoBank Corp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCI and KakaoBank is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp and SCI Information 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 SCI Information Service are associated (or correlated) with KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of SCI Information i.e., SCI Information and KakaoBank Corp go up and down completely randomly.
Pair Corralation between SCI Information and KakaoBank Corp
Assuming the 90 days trading horizon SCI Information Service is expected to under-perform the KakaoBank Corp. But the stock apears to be less risky and, when comparing its historical volatility, SCI Information Service is 1.02 times less risky than KakaoBank Corp. The stock trades about -0.03 of its potential returns per unit of risk. The KakaoBank Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,510,000 in KakaoBank Corp on September 13, 2024 and sell it today you would lose (140,000) from holding KakaoBank Corp or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. KakaoBank Corp
Performance |
| Timeline |
| SCI Information Service |
| KakaoBank Corp |
SCI Information and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and KakaoBank Corp
The main advantage of trading using opposite SCI Information and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| SCI Information vs. KB Financial Group | SCI Information vs. Shinhan Financial Group | SCI Information vs. Hana Financial | SCI Information vs. Woori Financial Group |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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