Correlation Between Korea Computer and MEDIPOST
Can any of the company-specific risk be diversified away by investing in both Korea Computer and MEDIPOST 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 MEDIPOST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and MEDIPOST Co, you can compare the effects of market volatilities on Korea Computer and MEDIPOST 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 MEDIPOST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and MEDIPOST.
Diversification Opportunities for Korea Computer and MEDIPOST
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korea and MEDIPOST is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and MEDIPOST Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPOST 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 MEDIPOST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPOST has no effect on the direction of Korea Computer i.e., Korea Computer and MEDIPOST go up and down completely randomly.
Pair Corralation between Korea Computer and MEDIPOST
Assuming the 90 days trading horizon Korea Computer is expected to generate 2.85 times less return on investment than MEDIPOST. But when comparing it to its historical volatility, Korea Computer is 1.17 times less risky than MEDIPOST. It trades about 0.02 of its potential returns per unit of risk. MEDIPOST Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 780,000 in MEDIPOST Co on October 16, 2024 and sell it today you would earn a total of 341,000 from holding MEDIPOST Co or generate 43.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer vs. MEDIPOST Co
Performance |
| Timeline |
| Korea Computer |
| MEDIPOST |
Korea Computer and MEDIPOST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and MEDIPOST
The main advantage of trading using opposite Korea Computer and MEDIPOST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, MEDIPOST 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 MEDIPOST will offset losses from the drop in MEDIPOST's long position.| Korea Computer vs. Hankuk Steel Wire | Korea Computer vs. Fine Besteel Co | Korea Computer vs. PLAYWITH | Korea Computer vs. Alton Sports CoLtd |
| MEDIPOST vs. Heungkuk Metaltech CoLtd | MEDIPOST vs. Korea Computer | MEDIPOST vs. Nable Communications | MEDIPOST vs. Display Tech 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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