Correlation Between Genie Music and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Genie Music and Korea Computer 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 Genie Music and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Music and Korea Computer, you can compare the effects of market volatilities on Genie Music and Korea Computer 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 Genie Music with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Korea Computer.
Diversification Opportunities for Genie Music and Korea Computer
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Genie and Korea is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer and Genie Music 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 Genie Music are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Genie Music i.e., Genie Music and Korea Computer go up and down completely randomly.
Pair Corralation between Genie Music and Korea Computer
Assuming the 90 days trading horizon Genie Music is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Genie Music is 1.02 times less risky than Korea Computer. The stock trades about -0.03 of its potential returns per unit of risk. The Korea Computer is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 416,659 in Korea Computer on August 30, 2024 and sell it today you would earn a total of 85,341 from holding Korea Computer or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Music vs. Korea Computer
Performance |
| Timeline |
| Genie Music |
| Korea Computer |
Genie Music and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Music and Korea Computer
The main advantage of trading using opposite Genie Music and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| Genie Music vs. Korea New Network | Genie Music vs. Busan Industrial Co | Genie Music vs. Busan Ind | Genie Music vs. Shinhan WTI Futures |
| Korea Computer vs. Daou Data Corp | Korea Computer vs. Busan Industrial Co | Korea Computer vs. Busan Ind | Korea Computer vs. Shinhan WTI Futures |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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