Correlation Between ENERGYMACHINERY KOREA and EBEST Investment
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and EBEST Investment 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 EBEST Investment 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 EBEST Investment Securities, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and EBEST Investment 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 EBEST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and EBEST Investment.
Diversification Opportunities for ENERGYMACHINERY KOREA and EBEST Investment
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENERGYMACHINERY and EBEST is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and EBEST Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBEST Investment Sec 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 EBEST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBEST Investment Sec has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and EBEST Investment go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and EBEST Investment
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to under-perform the EBEST Investment. In addition to that, ENERGYMACHINERY KOREA is 1.27 times more volatile than EBEST Investment Securities. It trades about -0.42 of its total potential returns per unit of risk. EBEST Investment Securities is currently generating about -0.29 per unit of volatility. If you would invest 437,000 in EBEST Investment Securities on September 12, 2024 and sell it today you would lose (55,000) from holding EBEST Investment Securities or give up 12.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. EBEST Investment Securities
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| EBEST Investment Sec |
ENERGYMACHINERY KOREA and EBEST Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and EBEST Investment
The main advantage of trading using opposite ENERGYMACHINERY KOREA and EBEST Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA position performs unexpectedly, EBEST Investment 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 EBEST Investment will offset losses from the drop in EBEST Investment's long position.| ENERGYMACHINERY KOREA vs. Korea New Network | ENERGYMACHINERY KOREA vs. Solution Advanced Technology | ENERGYMACHINERY KOREA vs. Busan Industrial Co | ENERGYMACHINERY KOREA vs. Busan Ind |
| EBEST Investment vs. KB Financial Group | EBEST Investment vs. Shinhan Financial Group | EBEST Investment vs. Hana Financial | EBEST Investment vs. Woori Financial Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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