Correlation Between System and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both System and Korea Shipbuilding 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 System and Korea Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and Korea Shipbuilding Offshore, you can compare the effects of market volatilities on System and Korea Shipbuilding 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 System with a short position of Korea Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and Korea Shipbuilding.
Diversification Opportunities for System and Korea Shipbuilding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between System and Korea is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding and System 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 System and Application are associated (or correlated) with Korea Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Shipbuilding has no effect on the direction of System i.e., System and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between System and Korea Shipbuilding
Assuming the 90 days trading horizon System is expected to generate 4.25 times less return on investment than Korea Shipbuilding. In addition to that, System is 1.31 times more volatile than Korea Shipbuilding Offshore. It trades about 0.02 of its total potential returns per unit of risk. Korea Shipbuilding Offshore is currently generating about 0.12 per unit of volatility. If you would invest 19,600,000 in Korea Shipbuilding Offshore on October 24, 2024 and sell it today you would earn a total of 5,250,000 from holding Korea Shipbuilding Offshore or generate 26.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
| System and Application |
| Korea Shipbuilding |
System and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and Korea Shipbuilding
The main advantage of trading using opposite System and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, Korea Shipbuilding 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 Shipbuilding will offset losses from the drop in Korea Shipbuilding's long position.The idea behind System and Application and Korea Shipbuilding Offshore pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Korea Shipbuilding vs. Dongil Metal Co | Korea Shipbuilding vs. Heungkuk Metaltech CoLtd | Korea Shipbuilding vs. Wireless Power Amplifier | Korea Shipbuilding vs. Mobileleader CoLtd |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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