Correlation Between Cafe24 Corp and Settlebank
Can any of the company-specific risk be diversified away by investing in both Cafe24 Corp and Settlebank 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 Cafe24 Corp and Settlebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cafe24 Corp and Settlebank, you can compare the effects of market volatilities on Cafe24 Corp and Settlebank 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 Cafe24 Corp with a short position of Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cafe24 Corp and Settlebank.
Diversification Opportunities for Cafe24 Corp and Settlebank
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cafe24 and Settlebank is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cafe24 Corp and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and Cafe24 Corp 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 Cafe24 Corp are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Cafe24 Corp i.e., Cafe24 Corp and Settlebank go up and down completely randomly.
Pair Corralation between Cafe24 Corp and Settlebank
Assuming the 90 days trading horizon Cafe24 Corp is expected to generate 1.69 times more return on investment than Settlebank. However, Cafe24 Corp is 1.69 times more volatile than Settlebank. It trades about 0.06 of its potential returns per unit of risk. Settlebank is currently generating about -0.02 per unit of risk. If you would invest 1,180,000 in Cafe24 Corp on August 25, 2024 and sell it today you would earn a total of 1,865,000 from holding Cafe24 Corp or generate 158.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cafe24 Corp vs. Settlebank
Performance |
| Timeline |
| Cafe24 Corp |
| Settlebank |
Cafe24 Corp and Settlebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cafe24 Corp and Settlebank
The main advantage of trading using opposite Cafe24 Corp and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cafe24 Corp position performs unexpectedly, Settlebank 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 Settlebank will offset losses from the drop in Settlebank's long position.| Cafe24 Corp vs. Settlebank | Cafe24 Corp vs. SSR Inc | Cafe24 Corp vs. Busan Industrial Co | Cafe24 Corp vs. Busan Ind |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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