Correlation Between Korea Aerospace and ENERGYMACHINERY KOREA
Can any of the company-specific risk be diversified away by investing in both Korea Aerospace and ENERGYMACHINERY KOREA 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 Korea Aerospace and ENERGYMACHINERY KOREA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Aerospace Industries and ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on Korea Aerospace and ENERGYMACHINERY KOREA 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 Korea Aerospace with a short position of ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Aerospace and ENERGYMACHINERY KOREA.
Diversification Opportunities for Korea Aerospace and ENERGYMACHINERY KOREA
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and ENERGYMACHINERY is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Korea Aerospace Industries and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA and Korea Aerospace 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 Korea Aerospace Industries are associated (or correlated) with ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of Korea Aerospace i.e., Korea Aerospace and ENERGYMACHINERY KOREA go up and down completely randomly.
Pair Corralation between Korea Aerospace and ENERGYMACHINERY KOREA
Assuming the 90 days trading horizon Korea Aerospace Industries is expected to under-perform the ENERGYMACHINERY KOREA. But the stock apears to be less risky and, when comparing its historical volatility, Korea Aerospace Industries is 1.22 times less risky than ENERGYMACHINERY KOREA. The stock trades about -0.14 of its potential returns per unit of risk. The ENERGYMACHINERY KOREA CoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 229,500 in ENERGYMACHINERY KOREA CoLtd on October 23, 2024 and sell it today you would earn a total of 5,500 from holding ENERGYMACHINERY KOREA CoLtd or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Aerospace Industries vs. ENERGYMACHINERY KOREA CoLtd
Performance |
| Timeline |
| Korea Aerospace Indu |
| ENERGYMACHINERY KOREA |
Korea Aerospace and ENERGYMACHINERY KOREA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Aerospace and ENERGYMACHINERY KOREA
The main advantage of trading using opposite Korea Aerospace and ENERGYMACHINERY KOREA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Aerospace position performs unexpectedly, ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA will offset losses from the drop in ENERGYMACHINERY KOREA's long position.| Korea Aerospace vs. Hanwha Chemical Corp | Korea Aerospace vs. Kukdong Oil Chemicals | Korea Aerospace vs. KPX Green Chemical | Korea Aerospace vs. CU Medical Systems |
| ENERGYMACHINERY KOREA vs. Youl Chon Chemical | ENERGYMACHINERY KOREA vs. Youngbo Chemical Co | ENERGYMACHINERY KOREA vs. Tae Kyung Chemical | ENERGYMACHINERY KOREA vs. Hansol Homedeco 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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