Correlation Between Total Soft and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Total Soft 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 Total Soft and Korea Computer 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 Computer, you can compare the effects of market volatilities on Total Soft 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 Total Soft with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Korea Computer.
Diversification Opportunities for Total Soft and Korea Computer
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Total and Korea is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer 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 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 Total Soft i.e., Total Soft and Korea Computer go up and down completely randomly.
Pair Corralation between Total Soft and Korea Computer
Assuming the 90 days trading horizon Total Soft Bank is expected to under-perform the Korea Computer. In addition to that, Total Soft is 2.22 times more volatile than Korea Computer. It trades about -0.08 of its total potential returns per unit of risk. Korea Computer is currently generating about -0.03 per unit of volatility. If you would invest 515,000 in Korea Computer on September 2, 2024 and sell it today you would lose (17,000) from holding Korea Computer or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. Korea Computer
Performance |
| Timeline |
| Total Soft Bank |
| Korea Computer |
Total Soft and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and Korea Computer
The main advantage of trading using opposite Total Soft and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft 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.| Total Soft vs. Devsisters corporation | Total Soft vs. Konan Technology | Total Soft vs. Nice Information Telecommunication | Total Soft vs. InfoBank |
| Korea Computer vs. DSC Investment | Korea Computer vs. EBEST Investment Securities | Korea Computer vs. Sangsangin Investment Securities | Korea Computer vs. Korea Investment Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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