Correlation Between ENERGYMACHINERY KOREA and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and Korean Reinsurance 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 ENERGYMACHINERY KOREA and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and Korean Reinsurance Co, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and Korean Reinsurance 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 ENERGYMACHINERY KOREA with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Korean Reinsurance.
Diversification Opportunities for ENERGYMACHINERY KOREA and Korean Reinsurance
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between ENERGYMACHINERY and Korean is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Korean Reinsurance go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and Korean Reinsurance
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 0.98 times more return on investment than Korean Reinsurance. However, ENERGYMACHINERY KOREA CoLtd is 1.03 times less risky than Korean Reinsurance. It trades about 0.15 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.09 per unit of risk. If you would invest 219,500 in ENERGYMACHINERY KOREA CoLtd on October 30, 2024 and sell it today you would earn a total of 9,000 from holding ENERGYMACHINERY KOREA CoLtd or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. Korean Reinsurance Co
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| Korean Reinsurance |
ENERGYMACHINERY KOREA and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and Korean Reinsurance
The main advantage of trading using opposite ENERGYMACHINERY KOREA and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| ENERGYMACHINERY KOREA vs. Samsung Electronics Co | ENERGYMACHINERY KOREA vs. Samsung Electronics Co | ENERGYMACHINERY KOREA vs. KB Financial Group | ENERGYMACHINERY KOREA vs. Shinhan Financial Group |
| Korean Reinsurance vs. PNC Technologies co | Korean Reinsurance vs. Mirai Semiconductors Co | Korean Reinsurance vs. V One Tech Co | Korean Reinsurance vs. Hankukpackage 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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