Correlation Between Korea Investment and Korea Refract
Can any of the company-specific risk be diversified away by investing in both Korea Investment and Korea Refract 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 Refract 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 Refract, you can compare the effects of market volatilities on Korea Investment and Korea Refract 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 Refract. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Korea Refract.
Diversification Opportunities for Korea Investment and Korea Refract
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Korea is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Korea Refract in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refract 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 Refract. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refract has no effect on the direction of Korea Investment i.e., Korea Investment and Korea Refract go up and down completely randomly.
Pair Corralation between Korea Investment and Korea Refract
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 0.81 times more return on investment than Korea Refract. However, Korea Investment Holdings is 1.24 times less risky than Korea Refract. It trades about 0.07 of its potential returns per unit of risk. Korea Refract is currently generating about -0.09 per unit of risk. If you would invest 4,655,000 in Korea Investment Holdings on September 3, 2024 and sell it today you would earn a total of 755,000 from holding Korea Investment Holdings or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Korea Refract
Performance |
| Timeline |
| Korea Investment Holdings |
| Korea Refract |
Korea Investment and Korea Refract Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Korea Refract
The main advantage of trading using opposite Korea Investment and Korea Refract positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment position performs unexpectedly, Korea Refract 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 Refract will offset losses from the drop in Korea Refract's long position.| Korea Investment vs. Ssangyong Information Communication | Korea Investment vs. Grand Korea Leisure | Korea Investment vs. PLAYWITH | Korea Investment vs. Playgram Co |
| Korea Refract vs. Dongbang Transport Logistics | Korea Refract vs. Samwha Electronics Co | Korea Refract vs. Anam Electronics Co | Korea Refract vs. Sungdo 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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