Correlation Between Orbitech and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Orbitech 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 Orbitech and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orbitech Co and Korean Drug Co, you can compare the effects of market volatilities on Orbitech 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 Orbitech with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orbitech and Korean Drug.
Diversification Opportunities for Orbitech and Korean Drug
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Orbitech and Korean is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and Orbitech 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 Orbitech Co 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 Orbitech i.e., Orbitech and Korean Drug go up and down completely randomly.
Pair Corralation between Orbitech and Korean Drug
Assuming the 90 days trading horizon Orbitech Co is expected to generate 2.23 times more return on investment than Korean Drug. However, Orbitech is 2.23 times more volatile than Korean Drug Co. It trades about 0.04 of its potential returns per unit of risk. Korean Drug Co is currently generating about -0.39 per unit of risk. If you would invest 221,500 in Orbitech Co on September 4, 2024 and sell it today you would earn a total of 3,500 from holding Orbitech Co or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orbitech Co vs. Korean Drug Co
Performance |
| Timeline |
| Orbitech |
| Korean Drug |
Orbitech and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orbitech and Korean Drug
The main advantage of trading using opposite Orbitech and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orbitech 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.| Orbitech vs. LG Display | Orbitech vs. Hyundai Motor | Orbitech vs. Hyundai Motor Co | Orbitech vs. Hyundai Motor Co |
| Korean Drug vs. Orbitech Co | Korean Drug vs. HJ ShipBuilding Construction | Korean Drug vs. Lion Chemtech Co | Korean Drug vs. KMH Hitech Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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