Correlation Between STI and Korea Computer
Can any of the company-specific risk be diversified away by investing in both STI and Korea Computer 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 STI and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STI Co and Korea Computer, you can compare the effects of market volatilities on STI and Korea Computer 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 STI with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of STI and Korea Computer.
Diversification Opportunities for STI and Korea Computer
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STI and Korea is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding STI Co and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer and STI 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 STI Co are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of STI i.e., STI and Korea Computer go up and down completely randomly.
Pair Corralation between STI and Korea Computer
Assuming the 90 days trading horizon STI Co is expected to generate 1.51 times more return on investment than Korea Computer. However, STI is 1.51 times more volatile than Korea Computer. It trades about 0.03 of its potential returns per unit of risk. Korea Computer is currently generating about 0.03 per unit of risk. If you would invest 1,257,786 in STI Co on September 2, 2024 and sell it today you would earn a total of 241,214 from holding STI Co or generate 19.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STI Co vs. Korea Computer
Performance |
| Timeline |
| STI Co |
| Korea Computer |
STI and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STI and Korea Computer
The main advantage of trading using opposite STI and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STI position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| STI vs. Dongsin Engineering Construction | STI vs. Doosan Fuel Cell | STI vs. Daishin Balance 1 | STI vs. Total Soft Bank |
| Korea Computer vs. DSC Investment | Korea Computer vs. EBEST Investment Securities | Korea Computer vs. Sangsangin Investment Securities | Korea Computer vs. Korea Investment Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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