Correlation Between Korea New and Asia Technology
Can any of the company-specific risk be diversified away by investing in both Korea New and Asia Technology 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 Asia Technology 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 Asia Technology Co, you can compare the effects of market volatilities on Korea New and Asia Technology 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 Asia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Asia Technology.
Diversification Opportunities for Korea New and Asia Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Asia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Asia Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Technology 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 Asia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Technology has no effect on the direction of Korea New i.e., Korea New and Asia Technology go up and down completely randomly.
Pair Corralation between Korea New and Asia Technology
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the Asia Technology. In addition to that, Korea New is 1.19 times more volatile than Asia Technology Co. It trades about -0.06 of its total potential returns per unit of risk. Asia Technology Co is currently generating about -0.01 per unit of volatility. If you would invest 239,561 in Asia Technology Co on September 2, 2024 and sell it today you would lose (15,061) from holding Asia Technology Co or give up 6.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Asia Technology Co
Performance |
| Timeline |
| Korea New Network |
| Asia Technology |
Korea New and Asia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Asia Technology
The main advantage of trading using opposite Korea New and Asia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Asia Technology 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 Asia Technology will offset losses from the drop in Asia Technology'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 |
| Asia Technology vs. Camus Engineering Construction | Asia Technology vs. Daekyung Machinery Engineering | Asia Technology vs. Nice Information Telecommunication | Asia Technology vs. System and Application |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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