Correlation Between Korea Investment and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Korea Investment and Korea Steel 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 Korea Investment and Korea Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Investment Holdings and Korea Steel Co, you can compare the effects of market volatilities on Korea Investment and Korea Steel 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 Korea Investment with a short position of Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Korea Steel.
Diversification Opportunities for Korea Investment and Korea Steel
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and Korea is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Steel and Korea Investment 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 Korea Investment Holdings are associated (or correlated) with Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Korea Investment i.e., Korea Investment and Korea Steel go up and down completely randomly.
Pair Corralation between Korea Investment and Korea Steel
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 1.03 times more return on investment than Korea Steel. However, Korea Investment is 1.03 times more volatile than Korea Steel Co. It trades about 0.42 of its potential returns per unit of risk. Korea Steel Co is currently generating about 0.02 per unit of risk. If you would invest 5,250,000 in Korea Investment Holdings on November 3, 2024 and sell it today you would earn a total of 450,000 from holding Korea Investment Holdings or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Korea Investment Holdings vs. Korea Steel Co
Performance |
| Timeline |
| Korea Investment Holdings |
| Korea Steel |
Korea Investment and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Korea Steel
The main advantage of trading using opposite Korea Investment and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment position performs unexpectedly, Korea Steel 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 Steel will offset losses from the drop in Korea Steel's long position.| Korea Investment vs. Daesung Hi Tech Co | Korea Investment vs. Puloon Technology | Korea Investment vs. Daishin Information Communications | Korea Investment vs. KMH Hitech Co |
| Korea Steel vs. Dongbang Ship Machinery | Korea Steel vs. Foodnamoo | Korea Steel vs. KCC Engineering Construction | Korea Steel vs. Shinsegae Engineering Construction |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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