Correlation Between System and Korea Real
Can any of the company-specific risk be diversified away by investing in both System and Korea Real 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 Real 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 Real Estate, you can compare the effects of market volatilities on System and Korea Real 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 Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and Korea Real.
Diversification Opportunities for System and Korea Real
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between System and Korea is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate 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 Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of System i.e., System and Korea Real go up and down completely randomly.
Pair Corralation between System and Korea Real
Assuming the 90 days trading horizon System and Application is expected to generate 4.42 times more return on investment than Korea Real. However, System is 4.42 times more volatile than Korea Real Estate. It trades about 0.11 of its potential returns per unit of risk. Korea Real Estate is currently generating about -0.14 per unit of risk. If you would invest 141,900 in System and Application on August 27, 2024 and sell it today you would earn a total of 8,000 from holding System and Application or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. Korea Real Estate
Performance |
| Timeline |
| System and Application |
| Korea Real Estate |
System and Korea Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and Korea Real
The main advantage of trading using opposite System and Korea Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, Korea Real 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 Real will offset losses from the drop in Korea Real's long position.| System vs. Lake Materials Co | System vs. Top Material Co | System vs. TOPMATERIAL LTD | System vs. Lotte Data Communication |
| Korea Real vs. Samsung Electronics Co | Korea Real vs. Samsung Electronics Co | Korea Real vs. LG Energy Solution | Korea Real vs. SK Hynix |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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