Correlation Between RFTech and Grand Korea
Can any of the company-specific risk be diversified away by investing in both RFTech and Grand Korea 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 RFTech and Grand Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFTech Co and Grand Korea Leisure, you can compare the effects of market volatilities on RFTech and Grand Korea 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 RFTech with a short position of Grand Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and Grand Korea.
Diversification Opportunities for RFTech and Grand Korea
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RFTech and Grand is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and Grand Korea Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Korea Leisure and RFTech 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 RFTech Co are associated (or correlated) with Grand Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Korea Leisure has no effect on the direction of RFTech i.e., RFTech and Grand Korea go up and down completely randomly.
Pair Corralation between RFTech and Grand Korea
Assuming the 90 days trading horizon RFTech Co is expected to generate 1.14 times more return on investment than Grand Korea. However, RFTech is 1.14 times more volatile than Grand Korea Leisure. It trades about -0.04 of its potential returns per unit of risk. Grand Korea Leisure is currently generating about -0.05 per unit of risk. If you would invest 395,000 in RFTech Co on September 3, 2024 and sell it today you would lose (52,000) from holding RFTech Co or give up 13.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RFTech Co vs. Grand Korea Leisure
Performance |
| Timeline |
| RFTech |
| Grand Korea Leisure |
RFTech and Grand Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RFTech and Grand Korea
The main advantage of trading using opposite RFTech and Grand Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech position performs unexpectedly, Grand Korea 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 Grand Korea will offset losses from the drop in Grand Korea's long position.| RFTech vs. Lake Materials Co | RFTech vs. LS Materials | RFTech vs. Hana Materials | RFTech vs. Infinitt Healthcare Co |
| Grand Korea vs. Busan Industrial Co | Grand Korea vs. UNISEM Co | Grand Korea vs. RPBio Inc | Grand Korea vs. Finebesteel |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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