Correlation Between ICD and People Technology
Can any of the company-specific risk be diversified away by investing in both ICD and People Technology 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 People Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICD Co and People Technology, you can compare the effects of market volatilities on ICD and People Technology 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 People Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICD and People Technology.
Diversification Opportunities for ICD and People Technology
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICD and People is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ICD Co and People Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People Technology 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 People Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Technology has no effect on the direction of ICD i.e., ICD and People Technology go up and down completely randomly.
Pair Corralation between ICD and People Technology
Assuming the 90 days trading horizon ICD Co is expected to generate 0.72 times more return on investment than People Technology. However, ICD Co is 1.38 times less risky than People Technology. It trades about 0.1 of its potential returns per unit of risk. People Technology is currently generating about -0.21 per unit of risk. If you would invest 469,000 in ICD Co on September 1, 2024 and sell it today you would earn a total of 27,000 from holding ICD Co or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICD Co vs. People Technology
Performance |
| Timeline |
| ICD Co |
| People Technology |
ICD and People Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICD and People Technology
The main advantage of trading using opposite ICD and People Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD position performs unexpectedly, People Technology 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 People Technology will offset losses from the drop in People Technology's long position.| ICD vs. Samsung Electronics Co | ICD vs. Samsung Electronics Co | ICD vs. LG Energy Solution | ICD vs. SK Hynix |
| People Technology vs. Korea New Network | People Technology vs. ICD Co | People Technology vs. DYPNF CoLtd | People Technology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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