Correlation Between Korea Information and Techwing
Can any of the company-specific risk be diversified away by investing in both Korea Information and Techwing 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 Techwing 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 Techwing, you can compare the effects of market volatilities on Korea Information and Techwing 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 Techwing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Techwing.
Diversification Opportunities for Korea Information and Techwing
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Techwing is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Techwing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techwing 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 Techwing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techwing has no effect on the direction of Korea Information i.e., Korea Information and Techwing go up and down completely randomly.
Pair Corralation between Korea Information and Techwing
Assuming the 90 days trading horizon Korea Information Engineering is expected to under-perform the Techwing. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Engineering is 2.05 times less risky than Techwing. The stock trades about -0.01 of its potential returns per unit of risk. The Techwing is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,365,000 in Techwing on November 6, 2024 and sell it today you would lose (200,000) from holding Techwing or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Techwing
Performance |
| Timeline |
| Korea Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Techwing |
Korea Information and Techwing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Techwing
The main advantage of trading using opposite Korea Information and Techwing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Techwing 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 Techwing will offset losses from the drop in Techwing's long position.| Korea Information vs. Iljin Display | Korea Information vs. KPX Green Chemical | Korea Information vs. Korea Petro Chemical | Korea Information vs. Miwon Chemical |
| Techwing vs. Lotte Chilsung Beverage | Techwing vs. Daechang Steel Co | Techwing vs. Daehan Steel | Techwing vs. ABOV Semiconductor 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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