Correlation Between Display Tech and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Display Tech and Korea Computer 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 Display Tech and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Display Tech Co and Korea Computer, you can compare the effects of market volatilities on Display Tech and Korea Computer 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 Display Tech with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Display Tech and Korea Computer.
Diversification Opportunities for Display Tech and Korea Computer
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Display and Korea is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Display Tech Co and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer and Display Tech 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 Display Tech Co are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Display Tech i.e., Display Tech and Korea Computer go up and down completely randomly.
Pair Corralation between Display Tech and Korea Computer
Assuming the 90 days trading horizon Display Tech Co is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Display Tech Co is 2.73 times less risky than Korea Computer. The stock trades about -0.29 of its potential returns per unit of risk. The Korea Computer is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 518,000 in Korea Computer on September 4, 2024 and sell it today you would lose (30,500) from holding Korea Computer or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Display Tech Co vs. Korea Computer
Performance |
| Timeline |
| Display Tech |
| Korea Computer |
Display Tech and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Display Tech and Korea Computer
The main advantage of trading using opposite Display Tech and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Display Tech position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| Display Tech vs. Handok Clean Tech | Display Tech vs. Korea Investment Holdings | Display Tech vs. Clean Science co | Display Tech vs. Seoul Semiconductor Co |
| Korea Computer vs. Aprogen Healthcare Games | Korea Computer vs. Daol Investment Securities | Korea Computer vs. Seoul Semiconductor Co | Korea Computer vs. Korea Investment Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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