Correlation Between Total Soft and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Total Soft and Korean Drug 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 Total Soft and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and Korean Drug Co, you can compare the effects of market volatilities on Total Soft and Korean Drug 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 Total Soft with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Korean Drug.
Diversification Opportunities for Total Soft and Korean Drug
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Total and Korean is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and Total Soft 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 Total Soft Bank are associated (or correlated) with Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Total Soft i.e., Total Soft and Korean Drug go up and down completely randomly.
Pair Corralation between Total Soft and Korean Drug
Assuming the 90 days trading horizon Total Soft Bank is expected to generate 1.67 times more return on investment than Korean Drug. However, Total Soft is 1.67 times more volatile than Korean Drug Co. It trades about 0.02 of its potential returns per unit of risk. Korean Drug Co is currently generating about -0.04 per unit of risk. If you would invest 432,500 in Total Soft Bank on August 30, 2024 and sell it today you would earn a total of 38,500 from holding Total Soft Bank or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. Korean Drug Co
Performance |
| Timeline |
| Total Soft Bank |
| Korean Drug |
Total Soft and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and Korean Drug
The main advantage of trading using opposite Total Soft and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Total Soft vs. Lotte Energy Materials | Total Soft vs. EV Advanced Material | Total Soft vs. TOPMATERIAL LTD | Total Soft vs. Inzi Display CoLtd |
| Korean Drug vs. AnterogenCoLtd | Korean Drug vs. Busan Industrial Co | Korean Drug vs. Busan Ind | Korean Drug 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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