Correlation Between Korea New and Kolon Globalco
Can any of the company-specific risk be diversified away by investing in both Korea New and Kolon Globalco 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 New and Kolon Globalco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Kolon Globalco, you can compare the effects of market volatilities on Korea New and Kolon Globalco 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 New with a short position of Kolon Globalco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Kolon Globalco.
Diversification Opportunities for Korea New and Kolon Globalco
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Kolon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Kolon Globalco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Globalco and Korea New 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 New Network are associated (or correlated) with Kolon Globalco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Globalco has no effect on the direction of Korea New i.e., Korea New and Kolon Globalco go up and down completely randomly.
Pair Corralation between Korea New and Kolon Globalco
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the Kolon Globalco. But the stock apears to be less risky and, when comparing its historical volatility, Korea New Network is 2.44 times less risky than Kolon Globalco. The stock trades about -0.06 of its potential returns per unit of risk. The Kolon Globalco is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,230,084 in Kolon Globalco on September 2, 2024 and sell it today you would lose (235,084) from holding Kolon Globalco or give up 19.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Kolon Globalco
Performance |
| Timeline |
| Korea New Network |
| Kolon Globalco |
Korea New and Kolon Globalco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Kolon Globalco
The main advantage of trading using opposite Korea New and Kolon Globalco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Kolon Globalco 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 Kolon Globalco will offset losses from the drop in Kolon Globalco's long position.| Korea New vs. Hanshin Construction Co | Korea New vs. Netmarble Games Corp | Korea New vs. Seohee Construction Co | Korea New vs. Sungdo Engineering Construction |
| Kolon Globalco vs. Korea New Network | Kolon Globalco vs. ICD Co | Kolon Globalco vs. DYPNF CoLtd | Kolon Globalco vs. Busan Industrial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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