Correlation Between Korea Computer and Aurora World
Can any of the company-specific risk be diversified away by investing in both Korea Computer and Aurora World 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 Aurora World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and Aurora World, you can compare the effects of market volatilities on Korea Computer and Aurora World 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 Aurora World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Aurora World.
Diversification Opportunities for Korea Computer and Aurora World
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Aurora is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World 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 Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of Korea Computer i.e., Korea Computer and Aurora World go up and down completely randomly.
Pair Corralation between Korea Computer and Aurora World
Assuming the 90 days trading horizon Korea Computer is expected to generate 1.94 times less return on investment than Aurora World. In addition to that, Korea Computer is 1.62 times more volatile than Aurora World. It trades about 0.09 of its total potential returns per unit of risk. Aurora World is currently generating about 0.27 per unit of volatility. If you would invest 537,000 in Aurora World on September 13, 2024 and sell it today you would earn a total of 83,000 from holding Aurora World or generate 15.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Korea Computer vs. Aurora World
Performance |
| Timeline |
| Korea Computer |
| Aurora World |
Korea Computer and Aurora World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and Aurora World
The main advantage of trading using opposite Korea Computer and Aurora World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, Aurora World 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 Aurora World will offset losses from the drop in Aurora World's long position.| Korea Computer vs. Cube Entertainment | Korea Computer vs. Dreamus Company | Korea Computer vs. LG Energy Solution | Korea Computer vs. Dongwon System |
| Aurora World vs. Daou Data Corp | Aurora World vs. Solution Advanced Technology | Aurora World vs. Busan Industrial Co | Aurora World vs. Busan Ind |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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