Correlation Between Total Soft and AfreecaTV
Can any of the company-specific risk be diversified away by investing in both Total Soft and AfreecaTV 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 AfreecaTV 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 AfreecaTV Co, you can compare the effects of market volatilities on Total Soft and AfreecaTV 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 AfreecaTV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and AfreecaTV.
Diversification Opportunities for Total Soft and AfreecaTV
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Total and AfreecaTV is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and AfreecaTV Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfreecaTV 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 AfreecaTV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfreecaTV has no effect on the direction of Total Soft i.e., Total Soft and AfreecaTV go up and down completely randomly.
Pair Corralation between Total Soft and AfreecaTV
Assuming the 90 days trading horizon Total Soft is expected to generate 1.81 times less return on investment than AfreecaTV. In addition to that, Total Soft is 1.95 times more volatile than AfreecaTV Co. It trades about 0.02 of its total potential returns per unit of risk. AfreecaTV Co is currently generating about 0.06 per unit of volatility. If you would invest 10,200,000 in AfreecaTV Co on August 28, 2024 and sell it today you would earn a total of 490,000 from holding AfreecaTV Co or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. AfreecaTV Co
Performance |
| Timeline |
| Total Soft Bank |
| AfreecaTV |
Total Soft and AfreecaTV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and AfreecaTV
The main advantage of trading using opposite Total Soft and AfreecaTV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, AfreecaTV 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 AfreecaTV will offset losses from the drop in AfreecaTV's long position.| Total Soft vs. Posco ICT | Total Soft vs. Devsisters corporation | Total Soft vs. Nice Information Telecommunication | Total Soft vs. InfoBank |
| AfreecaTV vs. SS TECH | AfreecaTV vs. Busan Industrial Co | AfreecaTV vs. Busan Ind | AfreecaTV vs. Mirae Asset Daewoo |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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