Correlation Between ENERGYMACHINERY KOREA and Myoung Shin
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and Myoung Shin 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 Myoung Shin 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 Myoung Shin Industrial, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and Myoung Shin 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 Myoung Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Myoung Shin.
Diversification Opportunities for ENERGYMACHINERY KOREA and Myoung Shin
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between ENERGYMACHINERY and Myoung is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Myoung Shin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myoung Shin Industrial 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 Myoung Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myoung Shin Industrial has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Myoung Shin go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and Myoung Shin
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 1.2 times more return on investment than Myoung Shin. However, ENERGYMACHINERY KOREA is 1.2 times more volatile than Myoung Shin Industrial. It trades about -0.03 of its potential returns per unit of risk. Myoung Shin Industrial is currently generating about -0.05 per unit of risk. If you would invest 283,000 in ENERGYMACHINERY KOREA CoLtd on August 31, 2024 and sell it today you would lose (101,300) from holding ENERGYMACHINERY KOREA CoLtd or give up 35.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. Myoung Shin Industrial
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| Myoung Shin Industrial |
ENERGYMACHINERY KOREA and Myoung Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and Myoung Shin
The main advantage of trading using opposite ENERGYMACHINERY KOREA and Myoung Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA position performs unexpectedly, Myoung Shin 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 Myoung Shin will offset losses from the drop in Myoung Shin's long position.| ENERGYMACHINERY KOREA vs. Korea New Network | ENERGYMACHINERY KOREA vs. ICD Co | ENERGYMACHINERY KOREA vs. DYPNF CoLtd | ENERGYMACHINERY KOREA vs. Busan Industrial Co |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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