Correlation Between Korea New and Ecoplastic
Can any of the company-specific risk be diversified away by investing in both Korea New and Ecoplastic 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 Ecoplastic 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 Ecoplastic, you can compare the effects of market volatilities on Korea New and Ecoplastic 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 Ecoplastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Ecoplastic.
Diversification Opportunities for Korea New and Ecoplastic
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Ecoplastic is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of Korea New i.e., Korea New and Ecoplastic go up and down completely randomly.
Pair Corralation between Korea New and Ecoplastic
Assuming the 90 days trading horizon Korea New Network is expected to generate 1.05 times more return on investment than Ecoplastic. However, Korea New is 1.05 times more volatile than Ecoplastic. It trades about -0.04 of its potential returns per unit of risk. Ecoplastic is currently generating about -0.23 per unit of risk. If you would invest 80,000 in Korea New Network on August 29, 2024 and sell it today you would lose (1,900) from holding Korea New Network or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Korea New Network vs. Ecoplastic
Performance |
| Timeline |
| Korea New Network |
| Ecoplastic |
Korea New and Ecoplastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Ecoplastic
The main advantage of trading using opposite Korea New and Ecoplastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Ecoplastic 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 Ecoplastic will offset losses from the drop in Ecoplastic's long position.| Korea New vs. Hyundai Engineering Plastics | Korea New vs. Dongwon Metal Co | Korea New vs. Taeyang Metal Industrial | Korea New vs. LS Materials |
| Ecoplastic vs. KMH Hitech Co | Ecoplastic vs. GemVaxKAEL CoLtd | Ecoplastic vs. Busan Industrial Co | Ecoplastic 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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