Correlation Between Korea Information and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Korea Information 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 Korea Information and Korea Computer 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 Korea Computer Terminal, you can compare the effects of market volatilities on Korea Information 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 Korea Information with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Korea Computer.
Diversification Opportunities for Korea Information and Korea Computer
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korea and Korea is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Korea Computer Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Terminal 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 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 Terminal has no effect on the direction of Korea Information i.e., Korea Information and Korea Computer go up and down completely randomly.
Pair Corralation between Korea Information and Korea Computer
Assuming the 90 days trading horizon Korea Information Engineering is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Engineering is 1.03 times less risky than Korea Computer. The stock trades about -0.02 of its potential returns per unit of risk. The Korea Computer Terminal is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 368,151 in Korea Computer Terminal on August 30, 2024 and sell it today you would lose (121,651) from holding Korea Computer Terminal or give up 33.04% 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. Korea Computer Terminal
Performance |
| Timeline |
| Korea Information |
| Korea Computer Terminal |
Korea Information and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Korea Computer
The main advantage of trading using opposite Korea Information and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information 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.| Korea Information vs. Daou Data Corp | Korea Information vs. Busan Industrial Co | Korea Information vs. Busan Ind | Korea Information vs. Shinhan WTI Futures |
| Korea Computer vs. Sung Bo Chemicals | Korea Computer vs. Youngbo Chemical Co | Korea Computer vs. Miwon Chemical | Korea Computer vs. Youl Chon Chemical |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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