Correlation Between Korea Information and InfoBank
Can any of the company-specific risk be diversified away by investing in both Korea Information and InfoBank 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 Information and InfoBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Engineering and InfoBank, you can compare the effects of market volatilities on Korea Information and InfoBank 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 Information with a short position of InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and InfoBank.
Diversification Opportunities for Korea Information and InfoBank
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and InfoBank is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and Korea 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 Korea Information Engineering are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Korea Information i.e., Korea Information and InfoBank go up and down completely randomly.
Pair Corralation between Korea Information and InfoBank
Assuming the 90 days trading horizon Korea Information Engineering is expected to under-perform the InfoBank. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Engineering is 2.21 times less risky than InfoBank. The stock trades about -0.16 of its potential returns per unit of risk. The InfoBank is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 658,526 in InfoBank on October 13, 2024 and sell it today you would earn a total of 120,474 from holding InfoBank or generate 18.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. InfoBank
Performance |
| Timeline |
| Korea Information |
| InfoBank |
Korea Information and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and InfoBank
The main advantage of trading using opposite Korea Information and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| Korea Information vs. Daiyang Metal Co | Korea Information vs. Global Standard Technology | Korea Information vs. Eugene Technology CoLtd | Korea Information vs. iNtRON Biotechnology |
| InfoBank vs. Korea Information Communications | InfoBank vs. KyungIn Electronics Co | InfoBank vs. ABCO Electronics Co | InfoBank vs. Samsung Electronics Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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