Correlation Between Korea Information and DataSolution
Can any of the company-specific risk be diversified away by investing in both Korea Information and DataSolution 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 DataSolution 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 DataSolution, you can compare the effects of market volatilities on Korea Information and DataSolution 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 DataSolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and DataSolution.
Diversification Opportunities for Korea Information and DataSolution
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and DataSolution is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and DataSolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DataSolution 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 DataSolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DataSolution has no effect on the direction of Korea Information i.e., Korea Information and DataSolution go up and down completely randomly.
Pair Corralation between Korea Information and DataSolution
Assuming the 90 days trading horizon Korea Information Engineering is expected to under-perform the DataSolution. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Engineering is 2.18 times less risky than DataSolution. The stock trades about -0.35 of its potential returns per unit of risk. The DataSolution is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 426,000 in DataSolution on September 2, 2024 and sell it today you would earn a total of 64,500 from holding DataSolution or generate 15.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. DataSolution
Performance |
| Timeline |
| Korea Information |
| DataSolution |
Korea Information and DataSolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and DataSolution
The main advantage of trading using opposite Korea Information and DataSolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, DataSolution 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 DataSolution will offset losses from the drop in DataSolution's long position.| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
| DataSolution vs. Samsung Electronics Co | DataSolution vs. Samsung Electronics Co | DataSolution vs. LG Energy Solution | DataSolution vs. SK Hynix |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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