Correlation Between Korea New and DIGITAL CHOSUN
Can any of the company-specific risk be diversified away by investing in both Korea New and DIGITAL CHOSUN 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 DIGITAL CHOSUN 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 DIGITAL CHOSUN, you can compare the effects of market volatilities on Korea New and DIGITAL CHOSUN 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 DIGITAL CHOSUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and DIGITAL CHOSUN.
Diversification Opportunities for Korea New and DIGITAL CHOSUN
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and DIGITAL is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and DIGITAL CHOSUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL CHOSUN 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 DIGITAL CHOSUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL CHOSUN has no effect on the direction of Korea New i.e., Korea New and DIGITAL CHOSUN go up and down completely randomly.
Pair Corralation between Korea New and DIGITAL CHOSUN
Assuming the 90 days trading horizon Korea New Network is expected to generate 1.16 times more return on investment than DIGITAL CHOSUN. However, Korea New is 1.16 times more volatile than DIGITAL CHOSUN. It trades about 0.12 of its potential returns per unit of risk. DIGITAL CHOSUN is currently generating about 0.04 per unit of risk. If you would invest 79,200 in Korea New Network on September 22, 2024 and sell it today you would earn a total of 6,300 from holding Korea New Network or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. DIGITAL CHOSUN
Performance |
| Timeline |
| Korea New Network |
| DIGITAL CHOSUN |
Korea New and DIGITAL CHOSUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and DIGITAL CHOSUN
The main advantage of trading using opposite Korea New and DIGITAL CHOSUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, DIGITAL CHOSUN 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 DIGITAL CHOSUN will offset losses from the drop in DIGITAL CHOSUN's long position.| Korea New vs. FOODWELL Co | Korea New vs. Samlip General Foods | Korea New vs. Union Materials Corp | Korea New vs. Kukdong Oil Chemicals |
| DIGITAL CHOSUN vs. Han Kook Steel | DIGITAL CHOSUN vs. J Steel Co | DIGITAL CHOSUN vs. Cuckoo Electronics Co | DIGITAL CHOSUN vs. Insun Environment New |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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