Correlation Between Pyung Hwa and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Pyung Hwa and KakaoBank Corp 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 Pyung Hwa and KakaoBank Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyung Hwa Industrial and KakaoBank Corp, you can compare the effects of market volatilities on Pyung Hwa and KakaoBank Corp 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 Pyung Hwa with a short position of KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and KakaoBank Corp.
Diversification Opportunities for Pyung Hwa and KakaoBank Corp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pyung and KakaoBank is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp and Pyung Hwa 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 Pyung Hwa Industrial are associated (or correlated) with KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Pyung Hwa i.e., Pyung Hwa and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Pyung Hwa and KakaoBank Corp
Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to under-perform the KakaoBank Corp. But the stock apears to be less risky and, when comparing its historical volatility, Pyung Hwa Industrial is 1.31 times less risky than KakaoBank Corp. The stock trades about -0.21 of its potential returns per unit of risk. The KakaoBank Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,115,000 in KakaoBank Corp on August 29, 2024 and sell it today you would earn a total of 60,000 from holding KakaoBank Corp or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pyung Hwa Industrial vs. KakaoBank Corp
Performance |
| Timeline |
| Pyung Hwa Industrial |
| KakaoBank Corp |
Pyung Hwa and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pyung Hwa and KakaoBank Corp
The main advantage of trading using opposite Pyung Hwa and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyung Hwa position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| Pyung Hwa vs. Dongbang Transport Logistics | Pyung Hwa vs. ITM Semiconductor Co | Pyung Hwa vs. HB Technology TD | Pyung Hwa vs. Sewoon Medical Co |
| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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