Correlation Between ChipsMedia and Cafe24 Corp
Can any of the company-specific risk be diversified away by investing in both ChipsMedia and Cafe24 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 ChipsMedia and Cafe24 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChipsMedia and Cafe24 Corp, you can compare the effects of market volatilities on ChipsMedia and Cafe24 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 ChipsMedia with a short position of Cafe24 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChipsMedia and Cafe24 Corp.
Diversification Opportunities for ChipsMedia and Cafe24 Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ChipsMedia and Cafe24 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ChipsMedia and Cafe24 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cafe24 Corp and ChipsMedia 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 ChipsMedia are associated (or correlated) with Cafe24 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cafe24 Corp has no effect on the direction of ChipsMedia i.e., ChipsMedia and Cafe24 Corp go up and down completely randomly.
Pair Corralation between ChipsMedia and Cafe24 Corp
Assuming the 90 days trading horizon ChipsMedia is expected to generate 1.25 times more return on investment than Cafe24 Corp. However, ChipsMedia is 1.25 times more volatile than Cafe24 Corp. It trades about 0.24 of its potential returns per unit of risk. Cafe24 Corp is currently generating about 0.17 per unit of risk. If you would invest 1,657,000 in ChipsMedia on November 5, 2024 and sell it today you would earn a total of 307,000 from holding ChipsMedia or generate 18.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChipsMedia vs. Cafe24 Corp
Performance |
| Timeline |
| ChipsMedia |
| Cafe24 Corp |
ChipsMedia and Cafe24 Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChipsMedia and Cafe24 Corp
The main advantage of trading using opposite ChipsMedia and Cafe24 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChipsMedia position performs unexpectedly, Cafe24 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 Cafe24 Corp will offset losses from the drop in Cafe24 Corp's long position.| ChipsMedia vs. Daol Investment Securities | ChipsMedia vs. Ilji Technology Co | ChipsMedia vs. Nh Investment And | ChipsMedia vs. NH Investment Securities |
| Cafe24 Corp vs. Samsung Publishing Co | Cafe24 Corp vs. Nh Investment And | Cafe24 Corp vs. Automobile Pc | Cafe24 Corp vs. Lotte Rental Co |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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