Correlation Between ECSTELECOM and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM and Kumho Industrial 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 ECSTELECOM and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and Kumho Industrial Co, you can compare the effects of market volatilities on ECSTELECOM and Kumho Industrial 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 ECSTELECOM with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and Kumho Industrial.
Diversification Opportunities for ECSTELECOM and Kumho Industrial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between ECSTELECOM and Kumho is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and ECSTELECOM 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 ECSTELECOM Co are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and Kumho Industrial go up and down completely randomly.
Pair Corralation between ECSTELECOM and Kumho Industrial
Assuming the 90 days trading horizon ECSTELECOM Co is expected to generate 0.94 times more return on investment than Kumho Industrial. However, ECSTELECOM Co is 1.07 times less risky than Kumho Industrial. It trades about -0.02 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.12 per unit of risk. If you would invest 343,455 in ECSTELECOM Co on August 31, 2024 and sell it today you would lose (56,455) from holding ECSTELECOM Co or give up 16.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. Kumho Industrial Co
Performance |
| Timeline |
| ECSTELECOM |
| Kumho Industrial |
ECSTELECOM and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and Kumho Industrial
The main advantage of trading using opposite ECSTELECOM and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. Finebesteel |
| Kumho Industrial vs. Mobileleader CoLtd | Kumho Industrial vs. Nice Information Telecommunication | Kumho Industrial vs. SK Telecom Co | Kumho Industrial vs. Shinsegae Information Communication |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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