Correlation Between Korea Computer and Ssangyong Information
Can any of the company-specific risk be diversified away by investing in both Korea Computer and Ssangyong 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 Korea Computer and Ssangyong Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and Ssangyong Information Communication, you can compare the effects of market volatilities on Korea Computer and Ssangyong 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 Korea Computer with a short position of Ssangyong Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Ssangyong Information.
Diversification Opportunities for Korea Computer and Ssangyong Information
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korea and Ssangyong is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and Ssangyong Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Information and Korea Computer 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 Computer are associated (or correlated) with Ssangyong Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Information has no effect on the direction of Korea Computer i.e., Korea Computer and Ssangyong Information go up and down completely randomly.
Pair Corralation between Korea Computer and Ssangyong Information
Assuming the 90 days trading horizon Korea Computer is expected to generate 2.58 times more return on investment than Ssangyong Information. However, Korea Computer is 2.58 times more volatile than Ssangyong Information Communication. It trades about 0.22 of its potential returns per unit of risk. Ssangyong Information Communication is currently generating about 0.1 per unit of risk. If you would invest 476,000 in Korea Computer on August 26, 2024 and sell it today you would earn a total of 69,000 from holding Korea Computer or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer vs. Ssangyong Information Communic
Performance |
| Timeline |
| Korea Computer |
| Ssangyong Information |
Korea Computer and Ssangyong Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and Ssangyong Information
The main advantage of trading using opposite Korea Computer and Ssangyong Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, Ssangyong 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 Ssangyong Information will offset losses from the drop in Ssangyong Information's long position.| Korea Computer vs. Dongil Technology | Korea Computer vs. People Technology | Korea Computer vs. Hanmi Semiconductor Co | Korea Computer vs. Genie Music |
| Ssangyong Information vs. Lotte Energy Materials | Ssangyong Information vs. RF Materials Co | Ssangyong Information vs. Ecoplastic | Ssangyong Information vs. Top Material 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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