Correlation Between Korea New and SK Bioscience
Can any of the company-specific risk be diversified away by investing in both Korea New and SK Bioscience 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 SK Bioscience 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 SK Bioscience Co, you can compare the effects of market volatilities on Korea New and SK Bioscience 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 SK Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and SK Bioscience.
Diversification Opportunities for Korea New and SK Bioscience
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and 302440 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience 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 SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of Korea New i.e., Korea New and SK Bioscience go up and down completely randomly.
Pair Corralation between Korea New and SK Bioscience
Assuming the 90 days trading horizon Korea New is expected to generate 28.56 times less return on investment than SK Bioscience. But when comparing it to its historical volatility, Korea New Network is 1.69 times less risky than SK Bioscience. It trades about 0.01 of its potential returns per unit of risk. SK Bioscience Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,815,000 in SK Bioscience Co on November 2, 2024 and sell it today you would earn a total of 140,000 from holding SK Bioscience Co or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. SK Bioscience Co
Performance |
| Timeline |
| Korea New Network |
| SK Bioscience |
Korea New and SK Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and SK Bioscience
The main advantage of trading using opposite Korea New and SK Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, SK Bioscience 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 SK Bioscience will offset losses from the drop in SK Bioscience's long position.| Korea New vs. JYP Entertainment Corp | Korea New vs. Industrial Bank | Korea New vs. SM Entertainment Co | Korea New vs. Next Entertainment World |
| SK Bioscience vs. Genexine | SK Bioscience vs. Busan Industrial Co | SK Bioscience vs. Busan Ind | SK Bioscience vs. Mirae Asset Daewoo |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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