Correlation Between ICD and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both ICD and Korea Shipbuilding 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 ICD and Korea Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICD Co and Korea Shipbuilding Offshore, you can compare the effects of market volatilities on ICD and Korea Shipbuilding 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 ICD with a short position of Korea Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICD and Korea Shipbuilding.
Diversification Opportunities for ICD and Korea Shipbuilding
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ICD and Korea is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ICD Co and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding and ICD 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 ICD Co are associated (or correlated) with Korea Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Shipbuilding has no effect on the direction of ICD i.e., ICD and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between ICD and Korea Shipbuilding
Assuming the 90 days trading horizon ICD is expected to generate 1.83 times less return on investment than Korea Shipbuilding. But when comparing it to its historical volatility, ICD Co is 1.01 times less risky than Korea Shipbuilding. It trades about 0.1 of its potential returns per unit of risk. Korea Shipbuilding Offshore is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 18,340,000 in Korea Shipbuilding Offshore on September 1, 2024 and sell it today you would earn a total of 2,110,000 from holding Korea Shipbuilding Offshore or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICD Co vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
| ICD Co |
| Korea Shipbuilding |
ICD and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICD and Korea Shipbuilding
The main advantage of trading using opposite ICD and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD position performs unexpectedly, Korea Shipbuilding 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 Shipbuilding will offset losses from the drop in Korea Shipbuilding's long position.| ICD vs. Samsung Electronics Co | ICD vs. Samsung Electronics Co | ICD vs. LG Energy Solution | ICD vs. SK Hynix |
| Korea Shipbuilding vs. Korea New Network | Korea Shipbuilding vs. ICD Co | Korea Shipbuilding vs. DYPNF CoLtd | Korea Shipbuilding vs. Busan Industrial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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