Correlation Between EBEST Investment and Cosmecca Korea
Can any of the company-specific risk be diversified away by investing in both EBEST Investment and Cosmecca Korea 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 EBEST Investment and Cosmecca Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBEST Investment Securities and Cosmecca Korea Co, you can compare the effects of market volatilities on EBEST Investment and Cosmecca Korea 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 EBEST Investment with a short position of Cosmecca Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Cosmecca Korea.
Diversification Opportunities for EBEST Investment and Cosmecca Korea
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EBEST and Cosmecca is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Cosmecca Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmecca Korea and EBEST 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 EBEST Investment Securities are associated (or correlated) with Cosmecca Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmecca Korea has no effect on the direction of EBEST Investment i.e., EBEST Investment and Cosmecca Korea go up and down completely randomly.
Pair Corralation between EBEST Investment and Cosmecca Korea
Assuming the 90 days trading horizon EBEST Investment Securities is expected to generate 0.35 times more return on investment than Cosmecca Korea. However, EBEST Investment Securities is 2.84 times less risky than Cosmecca Korea. It trades about -0.29 of its potential returns per unit of risk. Cosmecca Korea Co is currently generating about -0.5 per unit of risk. If you would invest 443,000 in EBEST Investment Securities on September 4, 2024 and sell it today you would lose (40,000) from holding EBEST Investment Securities or give up 9.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EBEST Investment Securities vs. Cosmecca Korea Co
Performance |
| Timeline |
| EBEST Investment Sec |
| Cosmecca Korea |
EBEST Investment and Cosmecca Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBEST Investment and Cosmecca Korea
The main advantage of trading using opposite EBEST Investment and Cosmecca Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBEST Investment position performs unexpectedly, Cosmecca Korea 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 Cosmecca Korea will offset losses from the drop in Cosmecca Korea's long position.| EBEST Investment vs. ENERGYMACHINERY KOREA CoLtd | EBEST Investment vs. Hanshin Construction Co | EBEST Investment vs. Seohee Construction Co | EBEST Investment vs. Daejung Chemicals Metals |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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