Correlation Between Global Standard and Korea Investment
Can any of the company-specific risk be diversified away by investing in both Global Standard and Korea Investment 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 Global Standard and Korea Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and Korea Investment Holdings, you can compare the effects of market volatilities on Global Standard and Korea Investment 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 Global Standard with a short position of Korea Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and Korea Investment.
Diversification Opportunities for Global Standard and Korea Investment
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Korea is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings and Global Standard 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 Global Standard Technology are associated (or correlated) with Korea Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of Global Standard i.e., Global Standard and Korea Investment go up and down completely randomly.
Pair Corralation between Global Standard and Korea Investment
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 2.12 times more return on investment than Korea Investment. However, Global Standard is 2.12 times more volatile than Korea Investment Holdings. It trades about 0.28 of its potential returns per unit of risk. Korea Investment Holdings is currently generating about -0.09 per unit of risk. If you would invest 1,564,968 in Global Standard Technology on October 14, 2024 and sell it today you would earn a total of 257,032 from holding Global Standard Technology or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. Korea Investment Holdings
Performance |
| Timeline |
| Global Standard Tech |
| Korea Investment Holdings |
Global Standard and Korea Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and Korea Investment
The main advantage of trading using opposite Global Standard and Korea Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard position performs unexpectedly, Korea Investment 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 Investment will offset losses from the drop in Korea Investment's long position.| Global Standard vs. Ssangyong Materials Corp | Global Standard vs. Hotel Shilla Co | Global Standard vs. INNOX Advanced Materials | Global Standard vs. Hyundai Engineering Plastics |
| Korea Investment vs. Insun Environment New | Korea Investment vs. Jeju Beer Co | Korea Investment vs. Han Kook Steel | Korea Investment vs. Lotte Data Communication |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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