Correlation Between Korea Investment and Nasmedia
Can any of the company-specific risk be diversified away by investing in both Korea Investment and Nasmedia 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 Nasmedia 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 Nasmedia Co, you can compare the effects of market volatilities on Korea Investment and Nasmedia 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 Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Nasmedia.
Diversification Opportunities for Korea Investment and Nasmedia
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Nasmedia is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia 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 Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Korea Investment i.e., Korea Investment and Nasmedia go up and down completely randomly.
Pair Corralation between Korea Investment and Nasmedia
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 0.58 times more return on investment than Nasmedia. However, Korea Investment Holdings is 1.72 times less risky than Nasmedia. It trades about 0.13 of its potential returns per unit of risk. Nasmedia Co is currently generating about -0.14 per unit of risk. If you would invest 5,280,000 in Korea Investment Holdings on September 2, 2024 and sell it today you would earn a total of 130,000 from holding Korea Investment Holdings or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Nasmedia Co
Performance |
| Timeline |
| Korea Investment Holdings |
| Nasmedia |
Korea Investment and Nasmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Nasmedia
The main advantage of trading using opposite Korea Investment and Nasmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment position performs unexpectedly, Nasmedia 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 Nasmedia will offset losses from the drop in Nasmedia's long position.| Korea Investment vs. Shinsegae Engineering Construction | Korea Investment vs. Jinro Distillers Co | Korea Investment vs. KEPCO Engineering Construction | Korea Investment vs. Hanshin Construction 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 Stocks Directory module to find actively traded stocks across global markets.
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