Correlation Between ECSTELECOM and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM 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 ECSTELECOM and KakaoBank Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and KakaoBank Corp, you can compare the effects of market volatilities on ECSTELECOM 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 ECSTELECOM with a short position of KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and KakaoBank Corp.
Diversification Opportunities for ECSTELECOM and KakaoBank Corp
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between ECSTELECOM and KakaoBank is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 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 ECSTELECOM i.e., ECSTELECOM and KakaoBank Corp go up and down completely randomly.
Pair Corralation between ECSTELECOM and KakaoBank Corp
Assuming the 90 days trading horizon ECSTELECOM is expected to generate 1.7 times less return on investment than KakaoBank Corp. But when comparing it to its historical volatility, ECSTELECOM Co is 1.29 times less risky than KakaoBank Corp. It trades about 0.05 of its potential returns per unit of risk. KakaoBank Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,250,000 in KakaoBank Corp on November 27, 2024 and sell it today you would earn a total of 160,000 from holding KakaoBank Corp or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. KakaoBank Corp
Performance |
| Timeline |
| ECSTELECOM |
| KakaoBank Corp |
ECSTELECOM and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and KakaoBank Corp
The main advantage of trading using opposite ECSTELECOM and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM 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.| ECSTELECOM vs. CU Tech Corp | ECSTELECOM vs. NewFlex Technology Co | ECSTELECOM vs. Orbitech Co | ECSTELECOM vs. Taegu Broadcasting |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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