Correlation Between Aurora World and Korea Real
Can any of the company-specific risk be diversified away by investing in both Aurora World and Korea Real 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 Aurora World and Korea Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora World and Korea Real Estate, you can compare the effects of market volatilities on Aurora World and Korea Real 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 Aurora World with a short position of Korea Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora World and Korea Real.
Diversification Opportunities for Aurora World and Korea Real
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurora and Korea is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aurora World and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate and Aurora World 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 Aurora World are associated (or correlated) with Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of Aurora World i.e., Aurora World and Korea Real go up and down completely randomly.
Pair Corralation between Aurora World and Korea Real
Assuming the 90 days trading horizon Aurora World is expected to under-perform the Korea Real. In addition to that, Aurora World is 1.31 times more volatile than Korea Real Estate. It trades about -0.03 of its total potential returns per unit of risk. Korea Real Estate is currently generating about -0.04 per unit of volatility. If you would invest 124,664 in Korea Real Estate on September 4, 2024 and sell it today you would lose (23,464) from holding Korea Real Estate or give up 18.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora World vs. Korea Real Estate
Performance |
| Timeline |
| Aurora World |
| Korea Real Estate |
Aurora World and Korea Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora World and Korea Real
The main advantage of trading using opposite Aurora World and Korea Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora World position performs unexpectedly, Korea Real 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 Real will offset losses from the drop in Korea Real's long position.| Aurora World vs. Grand Korea Leisure | Aurora World vs. Handok Clean Tech | Aurora World vs. Clean Science co | Aurora World vs. Daishin Information Communications |
| Korea Real vs. JYP Entertainment Corp | Korea Real vs. SKONEC Entertainment Co | Korea Real vs. GS Engineering Construction | Korea Real vs. KEPCO Engineering Construction |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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