Correlation Between Korea Information and Xavis
Can any of the company-specific risk be diversified away by investing in both Korea Information and Xavis 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 Xavis 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 Xavis Co, you can compare the effects of market volatilities on Korea Information and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Xavis.
Diversification Opportunities for Korea Information and Xavis
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Xavis is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Korea Information i.e., Korea Information and Xavis go up and down completely randomly.
Pair Corralation between Korea Information and Xavis
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 0.6 times more return on investment than Xavis. However, Korea Information Engineering is 1.68 times less risky than Xavis. It trades about -0.41 of its potential returns per unit of risk. Xavis Co is currently generating about -0.47 per unit of risk. If you would invest 273,500 in Korea Information Engineering on September 1, 2024 and sell it today you would lose (37,000) from holding Korea Information Engineering or give up 13.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Xavis Co
Performance |
| Timeline |
| Korea Information |
| Xavis |
Korea Information and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Xavis
The main advantage of trading using opposite Korea Information and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' long position.| Korea Information vs. NICE Information Service | Korea Information vs. Korea Shipbuilding Offshore | Korea Information vs. National Plastic Co | Korea Information vs. Moadata 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.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |