Correlation Between Korea Investment and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both Korea Investment and Leaders Technology 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 Leaders Technology 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 Leaders Technology Investment, you can compare the effects of market volatilities on Korea Investment and Leaders Technology 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 Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Leaders Technology.
Diversification Opportunities for Korea Investment and Leaders Technology
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Leaders is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology 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 Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of Korea Investment i.e., Korea Investment and Leaders Technology go up and down completely randomly.
Pair Corralation between Korea Investment and Leaders Technology
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 0.48 times more return on investment than Leaders Technology. However, Korea Investment Holdings is 2.08 times less risky than Leaders Technology. It trades about 0.01 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about -0.09 per unit of risk. If you would invest 5,300,000 in Korea Investment Holdings on September 26, 2024 and sell it today you would lose (10,000) from holding Korea Investment Holdings or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Leaders Technology Investment
Performance |
| Timeline |
| Korea Investment Holdings |
| Leaders Technology |
Korea Investment and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Leaders Technology
The main advantage of trading using opposite Korea Investment and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.| Korea Investment vs. AptaBio Therapeutics | Korea Investment vs. Wonbang Tech Co | Korea Investment vs. Busan Industrial Co | Korea Investment vs. Busan Ind |
| Leaders Technology vs. KB Financial Group | Leaders Technology vs. Shinhan Financial Group | Leaders Technology vs. Hyundai Motor | Leaders Technology vs. Hyundai Motor Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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