Correlation Between System and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both System and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on System and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and KakaoBank Corp.
Diversification Opportunities for System and KakaoBank Corp
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between System and KakaoBank is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of System i.e., System and KakaoBank Corp go up and down completely randomly.
Pair Corralation between System and KakaoBank Corp
Assuming the 90 days trading horizon System and Application is expected to generate 2.01 times more return on investment than KakaoBank Corp. However, System is 2.01 times more volatile than KakaoBank Corp. It trades about 0.05 of its potential returns per unit of risk. KakaoBank Corp is currently generating about -0.08 per unit of risk. If you would invest 153,500 in System and Application on October 30, 2024 and sell it today you would earn a total of 2,700 from holding System and Application or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. KakaoBank Corp
Performance |
| Timeline |
| System and Application |
| KakaoBank Corp |
System and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and KakaoBank Corp
The main advantage of trading using opposite System and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| System vs. KPX Green Chemical | System vs. Namhae Chemical | System vs. Youl Chon Chemical | System vs. Hanjin Transportation Co |
| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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