Correlation Between Korea Investment and Korea Information
Can any of the company-specific risk be diversified away by investing in both Korea Investment and Korea Information 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 Information 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 Information Engineering, you can compare the effects of market volatilities on Korea Investment and Korea Information 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 Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Korea Information.
Diversification Opportunities for Korea Investment and Korea Information
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Korea and Korea is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Korea Investment i.e., Korea Investment and Korea Information go up and down completely randomly.
Pair Corralation between Korea Investment and Korea Information
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 0.54 times more return on investment than Korea Information. However, Korea Investment Holdings is 1.84 times less risky than Korea Information. It trades about 0.01 of its potential returns per unit of risk. Korea Information Engineering is currently generating about -0.24 per unit of risk. If you would invest 5,320,000 in Korea Investment Holdings on August 29, 2024 and sell it today you would earn a total of 10,000 from holding Korea Investment Holdings or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Korea Information Engineering
Performance |
| Timeline |
| Korea Investment Holdings |
| Korea Information |
Korea Investment and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Korea Information
The main advantage of trading using opposite Korea Investment and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information's long position.| Korea Investment vs. CG Hi Tech | Korea Investment vs. Seoul Broadcasting System | Korea Investment vs. Inzi Display CoLtd | Korea Investment vs. People Technology |
| Korea Information vs. Korea Real Estate | Korea Information vs. Korea Ratings Co | Korea Information vs. IQuest Co | Korea Information vs. Wonbang Tech 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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