Correlation Between Korea Information and Cube Entertainment
Can any of the company-specific risk be diversified away by investing in both Korea Information and Cube Entertainment 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 Cube Entertainment 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 Cube Entertainment, you can compare the effects of market volatilities on Korea Information and Cube Entertainment 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 Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Cube Entertainment.
Diversification Opportunities for Korea Information and Cube Entertainment
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Cube is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Korea Information i.e., Korea Information and Cube Entertainment go up and down completely randomly.
Pair Corralation between Korea Information and Cube Entertainment
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 0.9 times more return on investment than Cube Entertainment. However, Korea Information Engineering is 1.11 times less risky than Cube Entertainment. It trades about -0.01 of its potential returns per unit of risk. Cube Entertainment is currently generating about -0.02 per unit of risk. If you would invest 336,000 in Korea Information Engineering on September 12, 2024 and sell it today you would lose (69,000) from holding Korea Information Engineering or give up 20.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Cube Entertainment
Performance |
| Timeline |
| Korea Information |
| Cube Entertainment |
Korea Information and Cube Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Cube Entertainment
The main advantage of trading using opposite Korea Information and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Cube Entertainment 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 Cube Entertainment will offset losses from the drop in Cube Entertainment's long position.| Korea Information vs. Cube Entertainment | Korea Information vs. Dreamus Company | Korea Information vs. LG Energy Solution | Korea Information vs. Dongwon System |
| Cube Entertainment vs. Mobileleader CoLtd | Cube Entertainment vs. Dongwon Metal Co | Cube Entertainment vs. KT Submarine Telecom | Cube Entertainment vs. Hanjoo Light Metal |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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