Correlation Between Nature and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Nature 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 Nature and Korea Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nature and Environment and Korea Shipbuilding Offshore, you can compare the effects of market volatilities on Nature 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 Nature with a short position of Korea Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nature and Korea Shipbuilding.
Diversification Opportunities for Nature and Korea Shipbuilding
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nature and Korea is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nature and Environment and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding and Nature 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 Nature and Environment 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 Nature i.e., Nature and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between Nature and Korea Shipbuilding
Assuming the 90 days trading horizon Nature and Environment is expected to generate 0.48 times more return on investment than Korea Shipbuilding. However, Nature and Environment is 2.1 times less risky than Korea Shipbuilding. It trades about 0.08 of its potential returns per unit of risk. Korea Shipbuilding Offshore is currently generating about -0.01 per unit of risk. If you would invest 58,800 in Nature and Environment on October 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Nature and Environment or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nature and Environment vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
| Nature and Environment |
| Korea Shipbuilding |
Nature and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nature and Korea Shipbuilding
The main advantage of trading using opposite Nature and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nature 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.| Nature vs. Nice Information Telecommunication | Nature vs. Korea Information Communications | Nature vs. Wireless Power Amplifier | Nature vs. Nable Communications |
| Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. KB Financial Group | Korea Shipbuilding vs. Shinhan Financial Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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