Correlation Between Nasmedia and Kyung In
Can any of the company-specific risk be diversified away by investing in both Nasmedia and Kyung In 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 Nasmedia and Kyung In into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasmedia Co and Kyung In Synthetic Corp, you can compare the effects of market volatilities on Nasmedia and Kyung In 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 Nasmedia with a short position of Kyung In. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Kyung In.
Diversification Opportunities for Nasmedia and Kyung In
Very poor diversification
The 3 months correlation between Nasmedia and Kyung is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and Kyung In Synthetic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung In Synthetic and Nasmedia 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 Nasmedia Co are associated (or correlated) with Kyung In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung In Synthetic has no effect on the direction of Nasmedia i.e., Nasmedia and Kyung In go up and down completely randomly.
Pair Corralation between Nasmedia and Kyung In
Assuming the 90 days trading horizon Nasmedia Co is expected to under-perform the Kyung In. But the stock apears to be less risky and, when comparing its historical volatility, Nasmedia Co is 1.02 times less risky than Kyung In. The stock trades about -0.16 of its potential returns per unit of risk. The Kyung In Synthetic Corp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 298,000 in Kyung In Synthetic Corp on August 29, 2024 and sell it today you would lose (13,000) from holding Kyung In Synthetic Corp or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasmedia Co vs. Kyung In Synthetic Corp
Performance |
| Timeline |
| Nasmedia |
| Kyung In Synthetic |
Nasmedia and Kyung In Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasmedia and Kyung In
The main advantage of trading using opposite Nasmedia and Kyung In positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia position performs unexpectedly, Kyung In 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 Kyung In will offset losses from the drop in Kyung In's long position.The idea behind Nasmedia Co and Kyung In Synthetic Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kyung In vs. Korean Reinsurance Co | Kyung In vs. Lotte Non Life Insurance | Kyung In vs. Hyosung Advanced Materials | Kyung In vs. DB Financial Investment |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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