Correlation Between Mgame Corp and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Mgame Corp and Korea Petro 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 Mgame Corp and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mgame Corp and Korea Petro Chemical, you can compare the effects of market volatilities on Mgame Corp and Korea Petro 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 Mgame Corp with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mgame Corp and Korea Petro.
Diversification Opportunities for Mgame Corp and Korea Petro
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mgame and Korea is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mgame Corp and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Mgame Corp 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 Mgame Corp are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Mgame Corp i.e., Mgame Corp and Korea Petro go up and down completely randomly.
Pair Corralation between Mgame Corp and Korea Petro
Assuming the 90 days trading horizon Mgame Corp is expected to generate 0.87 times more return on investment than Korea Petro. However, Mgame Corp is 1.15 times less risky than Korea Petro. It trades about -0.02 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.04 per unit of risk. If you would invest 779,374 in Mgame Corp on October 16, 2024 and sell it today you would lose (263,374) from holding Mgame Corp or give up 33.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.22% |
| Values | Daily Returns |
Mgame Corp vs. Korea Petro Chemical
Performance |
| Timeline |
| Mgame Corp |
| Korea Petro Chemical |
Mgame Corp and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mgame Corp and Korea Petro
The main advantage of trading using opposite Mgame Corp and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mgame Corp position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Mgame Corp vs. DB Financial Investment | Mgame Corp vs. Korean Reinsurance Co | Mgame Corp vs. Eugene Technology CoLtd | Mgame Corp vs. Puloon Technology |
| Korea Petro vs. FNSTech Co | Korea Petro vs. Sungchang Autotech Co | Korea Petro vs. Hwangkum Steel Technology | Korea Petro vs. Lion Chemtech 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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