Correlation Between Korea Computer and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Korea Computer and Songwon Industrial 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 Computer and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer Terminal and Songwon Industrial Co, you can compare the effects of market volatilities on Korea Computer and Songwon Industrial 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 Computer with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Songwon Industrial.
Diversification Opportunities for Korea Computer and Songwon Industrial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Songwon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer Terminal and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Korea Computer 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 Computer Terminal are associated (or correlated) with Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Korea Computer i.e., Korea Computer and Songwon Industrial go up and down completely randomly.
Pair Corralation between Korea Computer and Songwon Industrial
Assuming the 90 days trading horizon Korea Computer Terminal is expected to generate 1.42 times more return on investment than Songwon Industrial. However, Korea Computer is 1.42 times more volatile than Songwon Industrial Co. It trades about 0.16 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about -0.11 per unit of risk. If you would invest 226,000 in Korea Computer Terminal on September 13, 2024 and sell it today you would earn a total of 27,000 from holding Korea Computer Terminal or generate 11.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer Terminal vs. Songwon Industrial Co
Performance |
| Timeline |
| Korea Computer Terminal |
| Songwon Industrial |
Korea Computer and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and Songwon Industrial
The main advantage of trading using opposite Korea Computer and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| Korea Computer vs. Polaris Office Corp | Korea Computer vs. Moonbae Steel | Korea Computer vs. BNK Financial Group | Korea Computer vs. Han Kook Steel |
| Songwon Industrial vs. Samsung Electronics Co | Songwon Industrial vs. Samsung Electronics Co | Songwon Industrial vs. SK Hynix | Songwon Industrial vs. POSCO Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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