Correlation Between Nice Information and Kolon Life
Can any of the company-specific risk be diversified away by investing in both Nice Information and Kolon Life 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 Nice Information and Kolon Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice Information Telecommunication and Kolon Life Science, you can compare the effects of market volatilities on Nice Information and Kolon Life 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 Nice Information with a short position of Kolon Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and Kolon Life.
Diversification Opportunities for Nice Information and Kolon Life
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nice and Kolon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and Kolon Life Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Life Science and Nice 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 Nice Information Telecommunication are associated (or correlated) with Kolon Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Life Science has no effect on the direction of Nice Information i.e., Nice Information and Kolon Life go up and down completely randomly.
Pair Corralation between Nice Information and Kolon Life
Assuming the 90 days trading horizon Nice Information Telecommunication is expected to under-perform the Kolon Life. But the stock apears to be less risky and, when comparing its historical volatility, Nice Information Telecommunication is 1.79 times less risky than Kolon Life. The stock trades about -0.04 of its potential returns per unit of risk. The Kolon Life Science is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,895,000 in Kolon Life Science on September 14, 2024 and sell it today you would lose (855,000) from holding Kolon Life Science or give up 29.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice Information Telecommunica vs. Kolon Life Science
Performance |
| Timeline |
| Nice Information Tel |
| Kolon Life Science |
Nice Information and Kolon Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice Information and Kolon Life
The main advantage of trading using opposite Nice Information and Kolon Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice Information position performs unexpectedly, Kolon Life 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 Kolon Life will offset losses from the drop in Kolon Life's long position.| Nice Information vs. Cube Entertainment | Nice Information vs. Dreamus Company | Nice Information vs. LG Energy Solution | Nice Information vs. Dongwon System |
| Kolon Life vs. CKH Food Health | Kolon Life vs. Nice Information Telecommunication | Kolon Life vs. Korea Information Engineering | Kolon Life vs. FoodNamoo |
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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