Correlation Between Korea Information and ED
Can any of the company-specific risk be diversified away by investing in both Korea Information and ED 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 ED 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 ED Co, you can compare the effects of market volatilities on Korea Information and ED 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 ED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and ED.
Diversification Opportunities for Korea Information and ED
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and ED is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and ED Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED Co 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 ED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Co has no effect on the direction of Korea Information i.e., Korea Information and ED go up and down completely randomly.
Pair Corralation between Korea Information and ED
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 0.57 times more return on investment than ED. However, Korea Information Engineering is 1.74 times less risky than ED. It trades about -0.03 of its potential returns per unit of risk. ED Co is currently generating about -0.12 per unit of risk. If you would invest 269,500 in Korea Information Engineering on October 24, 2024 and sell it today you would lose (16,500) from holding Korea Information Engineering or give up 6.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. ED Co
Performance |
| Timeline |
| Korea Information |
| ED Co |
Korea Information and ED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and ED
The main advantage of trading using opposite Korea Information and ED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, ED 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 ED will offset losses from the drop in ED's long position.| Korea Information vs. Daishin Balance No8 | Korea Information vs. NAU IB Capital | Korea Information vs. Daishin Balance No | Korea Information vs. Daesung Private Equity |
| ED vs. DB Insurance Co | ED vs. Lotte Rental Co | ED vs. Samsung Life Insurance | ED vs. Korea Information Engineering |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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