Correlation Between Total Soft and Korea Information
Can any of the company-specific risk be diversified away by investing in both Total Soft and Korea Information 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 Korea Information 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 Korea Information Engineering, you can compare the effects of market volatilities on Total Soft and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Korea Information.
Diversification Opportunities for Total Soft and Korea Information
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Total and Korea is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Total Soft i.e., Total Soft and Korea Information go up and down completely randomly.
Pair Corralation between Total Soft and Korea Information
Assuming the 90 days trading horizon Total Soft Bank is expected to generate 2.17 times more return on investment than Korea Information. However, Total Soft is 2.17 times more volatile than Korea Information Engineering. It trades about -0.04 of its potential returns per unit of risk. Korea Information Engineering is currently generating about -0.11 per unit of risk. If you would invest 588,000 in Total Soft Bank on September 3, 2024 and sell it today you would lose (120,000) from holding Total Soft Bank or give up 20.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. Korea Information Engineering
Performance |
| Timeline |
| Total Soft Bank |
| Korea Information |
Total Soft and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and Korea Information
The main advantage of trading using opposite Total Soft and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information's long position.| Total Soft vs. Hanmi Semiconductor Co | Total Soft vs. Iljin Display | Total Soft vs. Dongbang Transport Logistics | Total Soft vs. Daol Investment Securities |
| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
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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